Holidays! School's Out For Summer, said Alice Cooper, the ageing rocker, who has never previously been known for his astute observations on the Stock Market. For many people, summer starts now, and holidays take priority over savings decisions. There is no break, however, for the market, although things are likely to quieten down as transaction volume diminishes.

Volatility is a measure of how erratically the market moves one way or another, and it may well be the case that with lower volumes, we see lower volatility over the summer months. Having said that, however, we are quickly approaching the second quarter reporting season in the US and the UK, which will set the sentiment for the rest of the year.

Last week, Alan Greenspan, chairman of the US Federal Reserve, set the tone, with a slightly more upbeat reading of the US economy. His signal that the threat of deflation was receding was enough to stop the bond bull market in its tracks, and it is now possible that we have seen the best from bonds. Mr Greenspan's comments vent support to the equity market rally, forecasting a pick-up in growth in the second half, to a range of 2.25 per cent to three per cent.

It is important to remember that many UK blue-chips have significant operations in the US. With the dollar regaining strength, earnings translated into sterling will have been enhanced. The UK's largest drugs company, GlaxoSmithKline, is one such company with very large US sales, but the dollar's recovery may have come too late to have a significant effect on profits, due to be announced today. Having said that, the company is still expected to announce second quarter profits £40m ahead, at £1.87bn. This translates to £235 a second.

Also in need of something of a tonic is Cadbury Schweppes. Not only are "fat products" under something of a cloud, but the company has already warned that its first-half profits announced today would be barely up on last year. Looking at the financials reporting this week, improving Legal and General will show tomorrow that it has returned to the black after last year's annus horribilis. The company's easter term report from the City read "must try harder". It will be interesting to see if its end of summer term report shows progress.

The same day sees oil company Shell reporting profits for the second quarter. With the crude oil price remaining at about $30 for much of the period, the figures are expected to resemble telephone numbers.

Northumbrian Water recently returned to the Stock Market, albeit on the junior AIM (Alternative Investment Market). The utility group was spun off in May from French company Suez. Northumbrian last week announced that it is applying for admission to the official list of the UK Listing Authority, and to trading on the London Stock Exchange's market. It anticipates that this will occur by the end of September this year.

UK airports operated by BAA handled 12 million passengers in June, an increase of 2.9 per cent against the previous year. July and August will see further numbers as the sun, sea and sangria seekers jet away.

- For investment advice contact Anthony Platts on 01642 608855.

Published: 23/07/2003