European shares slip on earnings updates but the rise of global stocks has appeared unstoppable in recent weeks - the S&P 500 nudging a new record high on Monday. Can it go on? David Pollard reports.
It's been a massive post-Brexit referendum rebound in world shares over the last month. But some of the questions it's now prompting are massive too. Can the rally go on? Are shares worth their current valuations? And - what sectors are in focus as the Q2 earnings reports roll in? For one analyst, it's the banks. Better than expected numbers from Bank of America doing little to hide a basic problem. (SOUNDBITE) (English) CMC MARKETS ANALYST, JASPER LAWLER, SAYING: "The low interest rate environment is really hammering them. We saw net interest margins at Bank of America at record lows - so clearly they are not able to make that same differential between what they are lending and what they are borrowing." Wall Street closed at a record high on Monday. Hopes there are that a slump in Q1 earnings bottomed out in Q2 - and should turn positive in Q3. Asia shares and European are more hesitant - rally fatigue apparently setting in. Brexit still the major preoccupation. (SOUNDBITE) (English) NICK PARSONS, GLOBAL HEAD FX STRATEGY, NAB, SAYING: "It will be seen as a very useful very external threat to business models. It will be a very handy excuse. I think we will hear a lot more from it." (SOUNDBITE) (German) BAADER BANK HEAD OF CAPITAL MARKETS ANALYSIS, ROBERT HALVER, SAYING: "Markets know: even if Britain leaves, they de facto don't leave, because the spirit of Europe is: 'What doesn't fit, is made to fit'." Some though are calling a possible top to the current highs. (SOUNDBITE) (English) CMC MARKETS ANALYST, JASPER LAWLER, SAYING: "There's still in my mind a very good chance the market sees a big downturn and pulls back into its previous range, just because the catalysts are a little bit uncertain." The one thing that - on previous form - could keep them where they are: the strong conviction among economists that more central bank easing can and will come. And, in the case of the Bank of Japan, as early as this month.