Now a month on from Brexit the first data giving an indication of the impact of the vote has emerged. The UK Purchasing Managers’ Index (PMI) for July came in at 47.7, with a reading of below 50 indicating a contraction in activity. This was the lowest reading since April 2009. An immediate contraction in activity was expected; however, the magnitude was greater than some economists had hoped for, resulting in a negative market reaction in equities and sterling. The PMI is a leading indicator, and it is reasonable to expect that further negative GDP data will follow. However, this is a short-term reaction; the longer term trend will take time to become clear.

Over the last two weeks, the Japanese stock market has risen by over 10%, on the back of a potential fiscal package worth £141bn expected to be announced by Prime Minister Shinzo Abe. The spending is designed to once again try and break the country from the grip of deflation. While it is not clear at this stage where the spending will be directed, the size of the package will almost certainly act as a boost to economic growth. Furthermore, if accelerated spending is combined with a further loosening of monetary policy, investor sentiment may once again turn positive towards Japan.

In the US the presidential elections are beginning to heat up as the Republican Party national convention was held last week and the Democratic Party’s this week providing a platform for Donald Trump and Hilary Clinton to rally their supporters. While the impact of the outcome on financial markets is debatable, as the media coverage of the contest intensifies, markets are likely to be increasingly volatile.

This week will see the Federal Reserve interest rate announcement on Wednesday and French GDP data released on Friday.