There are reasons for investors to be optimistic, so why are share prices lower in London?
Markets continue to climb the wall of worry with indices on both sides of the pond scaling record highs.
For the second consecutive day in the US, the S&P500 and Nasdaq closed at record highs, and in the case of the former, for an extraordinary 51st time this year.
Further progress on vaccine approvals has bolstered sentiment as the US fights to control the Delta variant, while the substantial fiscal and monetary stimulus programmes underpin economic growth. Almost 90% of companies beat expectations in the second-quarter reporting season and, although there are some concerns over whether earnings growth has peaked, the immediate outlook for corporate America stands to benefit from a recovering economy.
Volumes are currently light, exacerbating price movements, but at the same time there is clearly a war chest of capital waiting to be deployed by investors. In the year to date, the Dow Jones has now added 15.7%, the S&P500 19.7% and the Nasdaq 16.7%.
The more domestically focused FTSE250 may spend its time in the shadow of the FTSE100 premier index, but has been outshining its larger compatriot.
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Bolstered by a steadily recovering UK economy, M&A activity and some recently pleasing results, the FTSE250 is also nudging record highs, having topped the level of 24,000 for the first time yesterday. With international investors continuing to run the slide rule over UK stocks in general, there are clearly bargains to be found away from the larger and more obvious counterparts within the FTSE100. The FTSE250 has now risen by 16.8% in the year to date, trumping the progress of the FTSE100, which is currently ahead by 10.2%.
A tepid opening to trading has seen investors choosing to react to further weakness in Asian markets, as opposed to the further strength of Wall Street. From a technical perspective, the usual slew of FTSE100 stocks being marked ex-dividend on a Thursday also weighs on the index.
Even so, the progress of the major indices is reflective of the general move towards a return to normality, with the imminent Jackson Hole symposium providing an opportunity for the Federal Reserve to assure investors that the punch bowl will not be taken away just yet.
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