Daily News Report

Markets in a Flash

• Asian markets closed higher across the board overnight following the strong performance yesterday in the US.
• European equity markets are tentatively up this morning on strong European data. Real direction seams to be dampened as markets wait for the stress test results.
• Energy commodities are controlled by the bears today, while commodities in the agriculture, metals and livestock sectors are pushing higher.
• The GBP is strong today and has made gains against most other major currencies on the back of the better than expected UK GDP results. GBP/USD is approaching its 3 month high.
• The EUR/USD is testing its 1.2970 resistance at its 2 month highs as the EUR is bolstered by strong economic data.
• US equity futures are showing moderate gains suggesting a small rise at the opening bell.

News Focus

UK GDP figures better than expected

Preliminary GDP figures released today for the second quarter of 2010 show that the economy has grown nearly twice as fast as economists had expected. The statistics released by the office for national statistics show that Gross Domestic Production has grown by 1.1% in the second quarter, this is nearly twice the rate that consensus expected of 0.6%. This Q2 result follows the 0.3% expansion in Q1 and is the largest growth rate seen since Q1 of 2006. The strong growth has been fuelled by the services sector and the construction sector.

German Business Sentiment

The IFO business climate index which surveys 7000 business executives has reported a 3 year high. The 106.2 reported for July is higher than last month’s figure of 101.8 and is a huge improvement over the consensus expectation that the index would fall.

Coming up Today

EU Bank Stress Test Results

When these results are released later today it is expected that 10 out of the 91 banks tested are going to fail. The stress test results are expected to be release by the Committee of European banking Supervisors after European markets close at 1200ET.
The results of these tests are going to be crucial to the economic outlook in Europe and therefore affect the World. This means that these results will have a large effect on the markets, if fewer banks fail and their balance sheets are stronger than thought this should be bullish for the markets as it sets up the economy for a stronger recovery.