UK markets had a mixed week last week, with volatility spurred by central bank commentary and the spread of the Delta variant. The FTSE 100 closed -2bp, Small Caps -0.4% and the Stoxx 600 +0.2% for the week.

The UK GDP rose by less-than-expected in May, gaining 0.8% against 1.5% expected. Nevertheless, Berenberg remains upbeat about prospects for the economy. It estimates that UK real GDP increased by 4.8% qoq in Q2, slightly below its previous estimate of 5.0%. “However, temporary supply constraints in industry account for part of the slower-than-expected gain in May. As a result, we now expect slightly faster growth through H2 2021 as capacity issues are resolved over time. The adjustment to the quarterly GDP profile reduces our 2021 call to 6.8% from 7.0% and raises our 2022 call to 5.5% from 5.4%. We continue to expect the UK to reach its pre-pandemic level of output in Q1 2022.”

 

Source: Berenberg

 

Things to read today:

Spread of Delta variant casts shadow over Europe’s economic rebound (Financial Times)

ECB’s Lagarde Foresees July Policy Shift, 2022 transition (Bloomberg) 

ByteDance Shelved IPO Intentions After Chinese Regulators Warned About Data Security (WSJ)