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UK EQUITY MARKET INSIGHTS

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The UK equity market ended last week quietly. Having breached past highs, traders are now looking for any news that...
The UK equity market ended last week quietly. Having breached past highs, traders are now looking for any news that will help sustain the FTSE's current performance. This is likely to come in the form of further take-over speculation, with the emphasis now shifting to the smaller company sector.

There is little in the way of UK data to preoccupy the market this week, so the main focus will be on the US, where the second estimate of GDP growth in Q2 and the latest purchasing manager's index are to be published.

However, the event with the most market moving potential is the release of US employment data for August. The labour market was surprisingly weak in July, but is expected to have strengthened significantly in the last month.

The equity market will be looking for further clues to a strengthening US economy, and hence to the next likely move on interest rate policy. After last week's move by the Bundesbank to cut German interest rates many are hoping for a move towards easier monetary policy globally. This could prompt the spurt in equity markets that traders are looking for.

Results due this week:

Ladbrokes publish interim results on Thursday, and these should generate some interest being the first to fully reveal the impact of the national lottery. Pre-tax profits of between £57m and £62m are expected.

Rolls-Royce, the aero engine and industrial power group reports on Thursday, and pre-tax profits for the first half of the year are expected to have improved from £40m to about £60m. The improvement is expected to result more from cost-cutting than from a rise in engine sales.

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