Wednesday, 26th July: Latest data from the Office for National Statistics (ONS) this morning revealed the UK economy grew 0.3% in the three months to June, in line with expectations. It is a slight pickup from the 0.2% growth in the first quarter of the year as the economy benefitted from a “booming film industry” and a drive in the services sector. These more than offset falls in output in the manufacturing and construction sectors. On an annualised basis, growth accelerated to 1.2%, up from 0.9% in the previous quarter. The data comes a week before the Bank of England are due to meet again to discuss interest rates in the UK, with the subdued momentum in the economy securing rates at their current record low levels. Sterling took a slight dip following the announcement but is trading higher against the euro and US dollar at the time of writing: GBP/EUR @ €1.1223 (+0.32%) and GBP/USD @ $1.3058 (+0.24%).
The UK government has announced that the sale of new diesel and petrol cars and vans will be banned in the UK from 2040. It is in an attempt to reduce air pollution, and follows France’s lead who are aiming to end the sale of petrol and diesel vehicles by 2040 also. However, mayors of Madrid, Mexico City and Athens have also said they plan to ban diesel vehicles from city centres by 2025. The announcement comes as part of the £3bn “clean air strategy” which includes a £255m fund to help councils tackle emissions; allowing local authorities to create potential charging zones where there is highest pollution.
In the US, indices reached new record highs as earnings season continued. So far, more than 80% of S&P 500 companies have delivered earnings that have beaten forecasts in this reporting period. Commodities also continued to gain, with copper riding the momentum of expected increased demand from China. Brent oil moved higher above $50/bbl as US crude inventories fell 7.2m barrels, making it the consecutive drop. It gives support that the long-oversupplied oil market is starting to move in the right direction. Indices across Europe closed higher as eyes turn to the Federal Reserve decision this evening. Although no rate rise is expected (no press conference has been scheduled), investors will for looking for an indication of when the Fed will begin reducing its balance sheet.