Investor/An insider's guide to the market: Despite the arrival of summer and the school holidays, there has as yet been no let up in the steady flow of new economic and corporate data. Every new piece of economic data is being dissected with almost forensic interest.

This is because Federal Reserve chairman Ben Bernanke and European Central Bank president Jean-Claude Trichet have both declared at their respective policy meetings that upcoming economic data will be the main determinant in deciding the path of interest rates in coming months.

Likewise, the Japanese central bank is poised to end its long standing zero interest rate policy if the Japanese economy keeps recovering.

Sentiment regarding US interest rates is finely balanced between those expecting the Fed to pause interest rates at 5.25 per cent and those expecting a further one or possibly two quarter-point rate rises. The most recent data releases tend to support the "pause" school of thought. Non-farm payrolls were a little weaker than expected and US consumer credit expansion slowed to $4.4 billion in May after a buoyant $9.3 billion in April.

The purchasing managers index for conditions in US services industries was weaker than expected in June, falling to 57.0 from 60.1 in May. On the foreign exchange markets the dollar has resumed its downward trend, trading around $1.28 to the euro.

Investor's view is that the Fed will pause at 5.25 per cent but will indicate to the markets that further rises are still possible depending on economic developments. In Europe the ECB, as expected, held its official interest rate at 2.75 per cent at its last policy meeting. However, its statement was significant and its description of economic conditions was upbeat and the word "vigilance" was again used in respect of the need to avert the inflationary threat. Furthermore, the August 3rd meeting, which was originally scheduled as a teleconference with no subsequent press conference, has been rescheduled as a physically attended meeting to be followed by a press conference.

This would seem to be a strong signal that the official interest rate will be raised to 3 per cent in August. By year-end Investor expects the ECB official rate to be at 3.5 per cent and would not rule out a rate of 4 per cent by this time next year.

A pause in the US tightening cycle and a modest acceleration in the pace of the European interest rate tightening is a positive background for global equity markets. The interest rate rises now expected in Europe should not derail economic recovery.

Indeed, so far in July many equity indices have begun to recover from their May/June lows. Corporate earnings trends remain positive. In the US the second-quarter earnings season kicked off on Monday with Alcoa reporting. Overall, analysts are projecting another quarter of double-digit percentage growth in US corporate earnings. If this proves accurate it will mark the 11th consecutive quarter of growth at that pace.

Economic news concerning the Irish economy continues to be positive. Data from a widely reported construction purchasing managers survey suggests that activity levels remain strong. The index rose from 58.1 in May to 58.5 in June. The survey also found evidence of increased civil construction volumes compensating for slower volumes in housing and commercial. However, "slower" housing is only relative to buoyancy elsewhere and housing volumes this year are still expected to substantially exceed the record 86,000 units built in 2005.

The trading update news emanating from the Irish corporate sector also remains upbeat. In an AGM statement DCC indicated that it was well-positioned to achieve market expectations this year. In particular its IT division Sercom is experiencing a continued pick-up in results. In acquisitions, DCC bought Carlton Fuels, a north of England oil distribution business, and 50 per cent of William Tracey, Scotland's leading recycling and waste management business.

However, the "golden boot" award for trading update of the summer must go to C&C group. At its recent AGM the group reported that both revenues and operating profit for the first four months of the financial year are significantly ahead of expectations. Sales growth of its UK cider brand, Magners, is running well ahead of expectations and profit margins are being sustained. In Ireland Bulmers continues to gain market share. Brokers rushed to increase their profit forecasts by 17 per cent and the already strong share price rose further.As well as sipping their cool Bulmers, investors could do worse than invest in the shares.

Investor says...

A pause in the US tightening cycle and a modest acceleration in the pace of the European interest rate tightening is a positive background for global equity markets. At home, effervescent C&C offers prospects.