Before the open - 01/07

Today marks the first day of trading in the second half of 2013, and the arrival of new Bank of England governor Mark Carney.

The Nikkei enjoyed a late surge in trading last night, finishing up 1.28 per cent following gains of 3.4 per cent last week. Investors have been given confidence by Japanese prime minister Shinzo Abe's policy of aggressive easing.

Outside of Japan, however, Asian stocks didn't perform so well, pulled down by US Fed governor Jeremy Stein's comments on Friday that September would be an opportune time to assess the scaling back of its monetary stimulus, and Bank of Richmond president Jeffrey Lacker's remarks that further stimulus would not be effective and that market volatility following the tapering announcement was to be expected.

In addition, investors didn't take too kindly to HSBC's PMI index falling from 49.2 in May to a nine month low of 48.2 in June. The government's own survey was slightly more optimistic at 50.1, although this still only indicates flat growth, and is down from May's 50.8.

Yesterday, Goldman Sachs lowered its 12 month target on the MSCI Asia ex-Japan Index to 480 from 550. It currently expects 6.1 per cent GDP growth in the region, revised down from 6.9 per cent at the start of the year. Similarly, predictions for earnings per share have been revised from 12 per cent to nine per cent.

The macro environment has turned less favorable for regional equities. Markets are pricing QE tapering, leading to tighter financial conditions. Growth estimates have declined, notably in China, as policy makers there turn more constrictive.

Commenting at 0715, Panmure Gordon's David Buik said:

Today's key events:

Mark Carney’s first day as Bank of England governor

0853: German manufacturing PMI (June)

0858: Eurozone manufacturing PMI (June)

0928: UK manufacturing PMI (June)

0930: UK consumer credit (May)

0930: UK mortgage approvals (May)

0930: UK net lending to individuals

1000: Euro area CPI (June)

1358: US manufacturing PMI (June)

1500: US construction spending (May)

1500: Institute for Supply Management prices paid (June)