The market opened with a rally at the start of the week as we saw the first high-profile cross-border M&A bid emerge, while the UK continues to rest patiently in the Brexit waiting room. Domestic and international investors alike reacted well to the announcement of SoftBank’s intention to acquire ARM Holdings; a thought-out strategic investment or a move to benefit from sterling depreciation – either way it lays the foundation for a new era of foreign investment.

The IMF also cut its forecast for global growth, saying Brexit has ‘thrown a spanner in the works’ of the world’s economic recovery. The IMF expected global growth of 3.1% in 2016 and 3.4% in 2017 – both 0.1 points lower than forecast in April. It predicted the UK economy will grow by 1.3% in 2017 – 0.9 points lower than its previous estimate.

Markets continued their positive run after upbeat jobs numbers, however, with the Agents’ Summary of Business Conditions survey for July stating there was no clear evidence of a ‘sharp general slowing’ in economic activity post-Brexit.

The long-awaited data point last week was the policy announcement from the ECB President Mario Draghi of a maintaining of interest rates, also reiterating that the bank was ready and willing to act if warranted. He said the ECB needed more information on the fallout from Brexit and new economic data projections, which become available at the next policy meeting in September, before considering taking further action.

Key market catalysts this week

  • 26th July – US Consumer Confidence (15:00)
  • 27th July – GBP Gross Domestic Product (YoY) (2Q A) (9:30)
  • 27th July – US FOMC Rate Decision (19:00)