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Market Outlook: Investors shift their focus

The financial markets continue to be dominated by sharp price fluctuations. After a turbulent June, in which global equities fell by several percent, the mood in early July was somewhat more positive. Many equity markets saw their greatest price hikes in a year in the first full week of trading in July.

The upturn was partially thanks to some better than expected indicators in Europe. These demonstrated, for instance, that European industry has so far been largely unaffected by the sovereign debt crisis which has gripped the region over the past few months. This helped to push aside concerns on the financial markets about sovereign debt. Policymakers again made a significant contribution to restoring confidence. Firstly, via the intervention by the ECB, the EU and the IMF and secondly - after initial scepticism - the stress tests for European banks also appear to be winning over investor confidence. Initial results are to be announced on Friday 23 July.

While in Europe sentiment improved, several disappointing economic data in the US contributed to a bleak mood on Wall Street. The Federal Reserve downwardly adjusted its growth outlook for this year.

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