Busy week before the usual August lull
Last week’s market action was one of the busiest so far this summer, with a slew of corporate earnings announcements, important economic data releases, a highly anticipated Fed meeting and another regulatory-induced sell-off in Chinese equities. There was a lot of push and pull with equities finishing slightly lower to where they started the week, but still near all-time highs. In terms of economic data, the initial estimate of second-quarter GDP showed that US economic activity reclaimed its pre-pandemic peak and accelerated from the first quarter. Nonetheless, the 6.5 per cent annualised reading was meaningfully slower that the 8.4 per cent pace predicted by economists. The drag on growth came from a decline in inventories, housing investment, government spending, and a wider trade deficit, as imports rose faster than exports. Despite the headline miss, consumer spending, which represents around 70 per cent of overall demand, was stronger than expected, growing at 11.8 per cent. The reopening of the economy, aided by vaccinations, pent-up demand and a rundown of pandemic savings, powered spending higher. Growth in the second half of the year will become more challenging as...