City Watch: Mark Marshall on how investors have held their nerve following a testing few weeks

Mark Marshall of Charles Stanley & Co

Mark Marshall of Charles Stanley & Co

THE four weeks leading up to the last week in June proved a nerve-testing time for investors as markets began to digest and interpret remarks made by Ben Benanke of the Fed, as the beginning of the end for Quantitative Easing, a process by which US$85bn of extra liquidity is being pumped each month into the US economy.

Far from being bad news, many investors took the view that it could signal a revival in the US economy and the bulls have been rewarded by a recovery in US equities which has also spilled over into the UK with the FTSE gaining its seventh consecutive weekly advance.

However, reports of strong earnings data were curtailed during the latter part of the week by disappointing earnings from Microsoft and Google. Mid-summer is usually a quiet time with traders absent from their desks, but for those remaining, attention is being focused on the first half results season, which starts this week.

Today, Croda is likely to report earnings up around 2% from last year, while on Wednesday, half year results are due from GlaxoSmithKline and investors will be looking for some comment on the allegations of bribery in its Chinese markets. Results are also due on Thursday from Unilever, Rolls Royce, Reed Elselvier and Travis Perkins, and on Friday from BG Group and BSkyB

Recent mollifying comments from Mark Carney, Mario Draghi and Ben Benanke have been reflected in gently rising sovereign bond yields while questions about the sustainability of growth might lead to more central bank interventions and earnings forecasts rising higher. However, questions concerning Cyprus and Portugal could yet raise the spectre of further trouble in the eurozone.