It is a good morning for stocks, with the FTSE 100 up 50 points in early trading and US futures pointing towards a solid open this afternoon.

  • Stock markets recoup some lost ground.

  • Earnings reports justify optimistic outlook.

  • Dunelm steady in wake of update.

Equity markets appear to have shaken off their caution of recent weeks and are moving higher in unison this morning. Yesterday’s strong US CPI print and this morning’s robust Chinese PPI figure have not dented investor enthusiasm for stocks, after US earnings season got off to a good start from JPMorgan. The earnings call provided plenty of reasons to be cheerful, with the bank noting that the overall US recovery was intact and credit demand was still strong. LVMH’s numbers this week built on this theme, and TSMC’s figures overnight reinforced the view of a global economy that is still moving in the right direction, albeit at a slower place. Having dropped back in an orderly fashion into earnings season, it seems stock markets have now reached a level at which investors are once again happy about buying the dip, hence the broad recovery in indices this morning.

Gains in Dunelm have been reversed to an extent in morning trading, but after a nasty drop for the month so far a more positive view is emerging. The comments on margin reflect justified caution about the outlook for the second half, but it seems the UK consumer is still happy to spend on home furnishings, which chimes nicely with Barratt’s numbers yesterday. The past four weeks have seen the shares surge and then slump, but with the numbers out the way a more steady recovery is likely from here.

Ahead of the open, we expect the Dow to start at 34,580, up 203 points from last night’s close.

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