ABN AMRO : Yellen adopts more dovish tone

The past week saw Federal Reserve Chair Janet Yellen give her testimony to both the Senate and the House of Representatives. Her remarks suggested that the next 18 months might bring fewer rate hikes, to which global markets responded with upticks while bond yields dipped slightly.

With wages lagging behind what would be desirable to boost inflation and with the Federal Reserve quite keen for inflation to take offBen SteinebachHead of Investment Strategy

Employment stats at the end of last week revealed that the US created 222,000 new jobs in June, exceeding forecasts. At the same time, previous jobs figures for April and May were revised up, showing healthy growth in the US economy. With wages lagging behind what would be desirable to boost inflation and with the Federal Reserve quite keen for inflation to take off, Fed Chair Yellen took a more subdued tack on future interest rate increases - there are now likely to be three rather than four of these until the end of 2018, which we believe will materialise in December 2017 and in June and December 2018. The financial markets were pleased: bond yields came down both in the US and in the eurozone, even if only by a few basis points in the latter. Across the world, equity markets surged towards the end of the week, just a tad more in the eurozone than in the US.

Meanwhile, in the eurozone the ECB is still a long way off its first rate hike, as it has yet to decide on winding down its asset purchase programme. It wouldn't be surprising if ECB president Mario Draghi used the annual Jackson Hole monetary policy symposium of 24-26 August to first announce tapering, much as he unveiled the start of the asset purchase programme at the 2014 symposium. Factor in stubbornly low inflation, and a first interest rate increase looks unlikely before the start of 2019.

Fine week for AEX

The AEX index had a very good week and rode the wave of positive global sentiment, with equity markets moving up mostly on Yellen's comments.

The key Amsterdam gauge enjoyed a very solid week and added over two per cent, now recording around 520. The upbeat mood ensured that none of its blue chips faced any material declines. The biggest gainers were led by ArcelorMittal (+9.4%), followed by Boskalis (+4.1%), Ahold (+3.9%), SBM Offshore (+3.3%) and ASML (+3.1%).

It was also the week of the SEMICON West technology industry convention, where the news was encouraging and upbeat. Industry players are well on their way to developing new technologies, Dutch companies ASML and ASMi among them. Vopak received the green light from the European Union to develop a new LNG terminal in Northern Germany through its joint venture with Gasunie and Oiltanking. AkzoNobel is still fighting off Elliot. It cancelled a scheduled meeting with its activist and biggest shareholder, following the news that Elliot had filed a second lawsuit.

Outside the Netherlands, Pepsico released better-than-expected profits and reiterated its outlook for the full year. With a bonanza of deals and discounts for Prime members, Amazon's third Prime Day was a resounding success and saw the company rake in more revenue than on any day in its history. It even beat key shopping days such as Black Friday and Cyber Monday. News about another of the tech giants was more worrying: Apple is reportedly toiling long and hard to iron out the new iPhone 8's software bugs to ensure it's ready for its September launch date. Rumours have it that the product launch may be pushed back. Snap, the parent company of Snapchat, this week dipped below its March IPO price. Markets are worrying over stagnating new user numbers, partly because rival Facebook has copied a lot of Snapchat's functionality through Instagram.

Abercrombie & Fitch saw its share price dip by a quarter after announcing that takeover talks were off. Meanwhile, Allianz had better news to share: Allianz-owned PIMCO saw its assets under management stage their biggest growth since 2014, the year of the controversial departure of co-founder Bill Gross and the subsequent massive AUM outflow. Lastly, Uber and Yandex linked up in Russia, although they have yet to launch a name for their new taxi platform.

Results season kicking into gear

The week ahead should see the second-quarter results season truly come into its own. In addition to a gaggle of US companies we will of course also be keeping our eyes peeled for the results of Dutch companies ASML and TomTom. The macroeconomic agenda also looks appealing, including ECB and Bank of Japan meetings as well as new figures from China.

The coming week will see the results season get into full swing. A selection of the long list of companies scheduled to report: Netflix, BlackRock, Bank of America, IBM, Goldman Sachs, Johnson & Johnson, AmeX, Qualcomm, TomTom, ASML, Microsoft, Unilever, PPG, Visa, ABB, General Electric and Philips Lighting.

ASML will release its figures on Wednesday. To date, semiconductor news has been mixed: Samsung last week reported ongoing strong global demand, while Taiwan's TSMC is facing reduced demand for its chips. According to Bloomberg data, analysts are assuming earnings per share (EPS) for ASML at EUR 0.97. Aside from its numbers, markets always take a great interest in ASML's new EUV technology.

TomTom's results are due out on the same day as ASML's. It has recently negotiated a couple of attractive collaborative ventures with Baidu and Cisco, with its automotive division a great beneficiary of self-drive car technology development currently in full swing. Markets are holding out for double-digit earnings growth in the years ahead, and are looking for improved gross margins in the second quarter, with EPS forecast at EUR 0.08 and revenue between EUR 925 million and EUR 950 million.

On Thursday, Unilever will report its results, which are expected to show little in the way of change compared with trends in the first quarter. The company will probably report organic sales growth of around 3.5% on moderately improved margins. And lastly, Philips Lighting will round off the week, with its second-quarter figures having to compare with challenging year-earlier showings - the markets are assuming organic sales falls of 0.9% and adjusted gross margins of 9.5%.

The outcome of the ECB's deliberations is the bit of macroeconomic news expected to hold the markets' attention next week. We don't expect any real policy changes or hints to that effect, but perhaps we'll be able to read some direction between the lines, new or otherwise. The Bank of Japan will also meet in the week, while fresh June inflation figures are due out for the United Kingdom, Germany and the EU as a whole. New data on construction output will be released for the EU and Italy, as well as on building starts in the United States in June (down a hefty 5.5% in May). The United Kingdom will release numbers on retail sales and the Netherlands on total consumption. The Netherlands and Belgium will also present new figures on consumer confidence in July. Germany's ZEW is set to publish its own index for investor sentiment in Germany and the EU. A whole raft of data is due out for China: GDP growth in the second quarter, industrial production, retail sales and capital spending in June, all of which should provide a little more insight into the Chinese economy's current state of health.