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Current Futures: Dow +47.00, S&P +6.40, NASDAQ +5.75

European markets continue the global rally, even though a report showed that the U.K. economy contracted 0.8% in the second quarter, almost three times more than expected.

Overnight markets are trading in the green, as investors remain bullish about the global recovery theme. If, over the last few months, investors used the macroeconomic data to gauge the direction of the global economy, now, traders are lured by the better than expected earnings reports. Until now, almost 2/3 of the companies listed in the S&P 500 beat analysts’ projections, something that has had a strong affect in the equity markets. 

However, investors received a cold showed during the European session, after a report showed that the U.K. economy contracted 0.8% in the second quarter, while the market expected a 0.3% decrease. Moreover, the U.K. GDP is down 5.6% from one year earlier, the biggest decline on record. To some extent, this shows that the global markets are overpriced, something that does not fully justify the current market valuation, TheLFB-Forex.com Trade Team said. Every major component of the U.K. economy had a negative contribution to the quarterly data, which again raises some doubts about the state of the economy. However, to balance the poor U.K. numbers, a different report showed that German business sentiment increased for the fourth month in a row.  

Despite the poor U.K. GDP data, the German Dax and the U.K. FTSE are up for the 10th consecutive day, the longest streak seen over the last few years. The technology and communication sectors advanced, after Vodafone beat analysts expectations, while the pharmaceutical sector was the worst performer in Europe as Merk, one of the largest European drug producers, had been downgraded. 

The following companies are expected to report later in the day: Black & Decker, Dover, Exelon Corp, Fortune Brands, Ingersoll-Rand Company Limited, Schlumberger and T. Rowe Price Group.

Overnight, the U.K. FTSE advanced 21.03 points (0.46%) to 4,580.83, while the German Dax gained 34.36 points (0.65%) to 5,281.64.

Crude oil for August delivery was recently trading at $67.20 per barrel, lower by $1.20. 

Gold for August delivery was recently trading higher by $0.60 to $949.60. 

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