Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

STOCK market news continues to be dominated by company earnings season. Around half-way through the second quarter reports out of the US, profits are around 86% better compared to 2020 - making it the best performance since 2009.

Earnings are being boosted by rising sales, up 21% on last year. That’s helping profits grow more than forecast, with expectations rising for the rest of the year and for 2022 as well.

This week’s main sector focus is insurance. Look out for Axa, Generali and Allianz in France, Italy and Germany respectively. In the UK, Direct Line and Hiscox are in the spotlight.

Dividend watch

Rising earnings are feeding through to higher dividends, notably in the UK. After last year’s slump in pay-outs to shareholders, companies in traditionally high-dividend-paying sectors like banks, miners and oil & gas are increasing payments to investors.

House price boom

Friday sees the Halifax monthly and yearly house price indices. These should confirm OECD data pointing to the fastest pace of house price growth in 30 years in the first three months of 2021, as those who saved money during the pandemic put their money into bricks and mortar.

China discount

After a poor month for Chinese shares, especially overseas-listed stocks in Hong Kong and New York, Beijing has moved to reassure investors. Recent clampdowns on tech stocks and the fast-growth private tutoring sector had seen share prices tumble. At the weekend, China said it was looking for greater co-operation with Washington on market listings. That might see a narrowing of the so-called ‘China discount’ with shares in Shanghai and Shenzhen lagging booming western markets in recent months.

Inflation, interest rates & wage growth

The big number to watch this week is Friday’s US non-farm payrolls employment data. A further 859,000 new jobs are expected for July, building on June’s strong showing and well ahead of the 583,000 reported in May. Unemployment is forecast to fall to 5.7% from 5.9%. All eyes are on wage growth, which at 3.6% threatens to boost inflation, currently standing at 5.4%.

In the UK, no change in interest rates is expected on Thursday but there will be a robust debate among Bank of England rate-setters on whether to start to rein in bond buying, aka quantitative easing. Recently departed chief economist Andy Haldane was arguing for this in May. Two other policy makers are likely to follow suit so expect a 6-2 split when the committee votes this week.

Economic reopening: time to travel again?

Finally, fingers crossed for anyone hoping to holiday in France this year. The green, amber and red categories are due to be revisited on Thursday following today’s easing of quarantine restrictions on travellers from most of the EU and America.

Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to a Fidelity adviser or an authorised financial adviser of your choice.

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