A-Level results day was a cheerful affair this year, with a record number of teenagers achieving A*s and As. In the business world, companies are also feeling chipper. They are celebrating a bumper financial results season, which has driven the
FTSE 100 and the S&P 500 to new highs.
Results round-up
Most US companies have now reported their half-year results, and average earnings growth stands at 11.8%. This is much better than the market expected; analysts were forecasting growth of under 5% back in June, according to FactSet.
Here in the UK, big players like Aviva, Glencore and Admiral have also exceeded expectations.
Fund managers are feeling confident as a result. According to the Bank of America’s latest fund manager survey, investors are the most bullish they have been since February. Allocation to global equities has risen for the fourth month in a row, while cash allocation is approaching a historic low.
This optimism has spread into company boardrooms. Despite trade wars and real wars, US chief executives are talking less about recession than usual. In fact, the word ‘recession’ has cropped up in just 16 results calls with S&P 500 bosses this season, according to FactSet analysis.
In short, the wisdom of ‘sell in May and go away’ has unravelled in 2025. Yes, there is trade turmoil, weak economic growth, stubborn inflation and fears that the American shares are overvalued – but key stock markets have kept climbing.
Economic updates
Amid all this exuberance, it’s more important than ever to watch what’s happening in the economy. And, despite being in the depths of August, we have a busy week of updates ahead.
On Thursday, there will be a flurry of PMI data from the world’s developed countries. The Purchasing Managers’ Index is based on monthly surveys of private sector companies and provides a snapshot of economic activity. Specifically, it will offer an early insight into the impact that tariffs are having on inflation.
So far so good, it seems. Last Tuesday, the US published a steady inflation figure of 2.7%. This prompted American stocks to rise, as traders increased bets that the Federal Reserve would cut interest rates in September.
More will be revealed on Friday, when bankers from around the world will gather in Jackson Hole, Wyoming, for the annual economic policy symposium. Federal Reserve chair Jerome Powell will discuss the economic outlook and set out what comes next for monetary policy.
It is a different story closer to home. Prices in the UK rose by 3.6% in the year to June, taking UK inflation to an unexpected 18-month high. The Bank of England has since warned that inflation could reach 4% in September. Data for August will be released on Wednesday, which should tell us more.
On a more positive note, GDP data for the UK pleasantly surprised investors last week. Economic growth came in at 0.3%, against forecasts of 0.1%.
The tussle between inflation and growth continues unabated, therefore – which means interest rate decisions still hang in the balance. According to Lloyds Bank, the chance of another cut this year is 66%. This follows a knife-edge vote earlier this month, which took the base rate down 4%.
HIGH STAKES!!!
On the global stage, US president Donald Trump met Russian leader Vladimir Putin on Friday. En route to the summit in Alaska, president Trump took to social media to post ‘HIGH STAKES!!!’. The drama was intense, but progress was limited, with Mr Trump failing to secure a commitment from Mr Putin to end the war.
President Volodymyr Zelensky will meet Mr Trump in the White House today to continue discussions. So far, however, markets haven’t blinked.
Get updates on markets, ISA funds, pension saving and much more