Thursday July 16, 2009 - 12:43:24 GMT
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Tamley Global Markets - www.tamley.com
Risk Appetite Returns
- Risk appetite on the agenda again
- UK labor market data shows high unemployment
The risk appetite will be driven today by the US Q2 earning report. Over the last 24 hours the markets have increased the risk appetite as traders are looking at the earnings data with optimism. According to a survey from Merrill Lynch Fund managers were more positive on economic growth in July but less positive on equities as risk appetite was kept on a tight leash. "Economic optimism is raising expectations of corporate profitability in both margins and earnings," the survey said. A net 51% of managers now believe the profit outlook will improve, compared to 49% taking this view on June.
The tempering of risk appetite sees sterling reverse some of yesterday's gains against the dollar. It though retains a generally weaker tone to the euro having lost ground following yesterday's data showing UK unemployment at its highest since January 1997.
There were mixed signals from yesterday's data on the state of UK labour market conditions. The increase in the claimant count, at 23,800 in June, was the smallest since May 2008. This was not much more than half of the expected 40,500 rise. At the same time, the May increase was revised downwards to 30,800 from 39,300 previously.
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