Funds are flowing out of ‘safe’ assets into riskier, more inflation resistant assets, such as equities, gold and oil. Oil and Gold in particular are in demand with oil touching $66.46 on Friday, and gold surging to $980. It is interesting to note that oil is now 45% below its peak in 2007, while the Dow Jones is down 60%. Oil fell further, but has recovered quicker.

UK banking shares managed a positive week, with Barclays once again leading the pack. There was a midweek wobble on the release of the FSA’s stress test methodology, which many have interpreted as not being stressful enough. The market appears to have priced in more adverse test conditions, causing many traders to re-asses their assumptions about the UK banking sector’s ability to weather a sustained economic downturn.

The coming week starts with a bank holiday across most of Europe. UK manufacturing PMI and US ISM manufacturing data are the standout economic releases for the day. Tuesday brings more US housing data with the release of pending home sales. Wednesday brings ADP non farm employment changed and Fed chairman Bernanke testifying. Thursday is extremely busy with rate statements due from the ECB and MPC and Bank of Canada. Friday closes an already busy week with Non Farm payroll numbers.

In the US, it seems to be the case that jobless claims data is setting a new record every week. Continuing claims are showing no signs of retreating, and it is no coincidence that mortgage delinquencies reached a record high of 9.12%. There was some positive news with new home sales rising month on month, but the down trend remains very much in place for the time being.

The resilience of the rally in equities is all the more impressive considering the onslaught of negative economic data, and the massive GM bankruptcy running in the background. However, lest we get ahead of ourselves, there is still a long way to go for both the stock market and the global economy.

A barrier range trade biased to the upside could be the best way to play this. A barrier range trade predicting that the Dow Jones (wall Street) won’t touch 7750 or 9250 in the next 60 days could return 110%.

Economic Calendar for week 1st – 5th June

**Note: All times GMT, not DST**

PLEASE NOTE – All times GMT

Monday June 1st:

Bank Holiday FR, GE

EU – 08:00 – Final Manufacturing PMI.
UK – 08:30 – Manufacturing PMI.
US – 12:30 – Core PCE Price Index M/M.
US – 12:30 – Personal Spending M/M.
US – 12:30 – Personal Income M/M.
US – 14:00 – ISM Manufacturing PMI.
US – 14:00 – Construction Spending M/M.
US – 14:00 – ISM Manufacturing Prices.

Tuesday June 2nd:

UK – 08:30 – Construction PMI.
UK – 08:30 – Net Lending To Individuals M/M.
UK – 08:30 – Mortgage Approvals.
EU – 09:00 – Unemployment Rate.
US – 14:00 – Pending Home Sales M/M.
UK – 23:01 – Nationwide Consumer Confidence.

Wednesday June 3rd:

EU – 08:00 – Final Services PMI.
UK – 08:30 – Services PMI.
EU – 09:00 – PMI M/M.
EU – 09:00 – Revised GDP Q/Q.
US – 11:30 – ADP Non-Farm Employment Change.
US – 14:00 – Fed Chairman Bernanke Testifies.
US – 14:00 – ISM Non-Manufacturing PMI.
US – 14:00 – Factory Orders.
US – 14:30 – Crude Oil Inventories.

Thursday June 4th:

EU – 09:00 – Retail Sales M/M.
UK – 11:00 – Official Bank Rate.
EU – 11:45 – Minimum Bid Rate.
US – 12:00 – FOMC Member Dudley Speaks.
EU – 12:30 – ECB Press Conference.
US – 12:30 – Unemployment Claims
US – 12:30 – Revised Non-Farm Activity Q/Q.
US – 12:30 – Revised Unit Labour Costs Q/Q.
US – 12:45 – Fed Chairman Bernanke Speaks.
US – 14:30 – Natural Gas Storage.

Friday June 5th:

EU – 07:50 – ECB President Trichet Speaks.
UK – 08:30 – PPI Input.
UK – 08:30 – PPI Output M/M.
US – 12:30 – Non-Farm Employment Change.
US – 12:30 – Unemployment Rate.
US – 12:30 – Average Hourly Earnings M/M.
US – 18:15 – FOMC Member Kohn Speaks.
US – 19:00 – Consumer Credit M/M.

EU – Europe wide
FR – France
UK – United Kingdom
US – United States
GE – Germany

US markets were also strong with Nasdaq 100 making it eight winning weeks on the trot. The rally came despite record continuing jobless claims in the US. However, it is thought that the decline in the four week average of weekly claims is pointing to a peak. Investors know they aren’t out of the woods yet, but perhaps what we’re seeing at the moment is a belief that financial Armageddon has been averted.

Markets were idle on Friday, with most of Europe enjoying a bank holiday, and UK traders eyeing the clock ahead of their long weekend. In fact, Friday’s trading on the FTSE 100 was the smallest since June 2008. Historically markets tend to bottom when volatility subsides. The VIX options volatility index continues to drop and credit markets indicate a renewed appetite for risk taking. It appears that traders may finally believe they have a grip on things. The world economy may continue to plummet, but at a much more predictable rate. Whether markets are too complacent, and in for a rude awakening or not, is another question.

The coming week starts in earnest with the release of US Pending home sales on Monday. Tuesday afternoon brings two market moving announcements with Fed chairman Bernanke testifying alongside the release of the latest ISM non manufacturing PMI data. Wednesday brings the ADP Non Farm Employment Change data, with UK Services PMI in the morning. Thursday is busy with the MPC and ECB releasing their official bank rates along with news of any planned central bank actions. The ECB are expected to cut rates by a quarter of 1%. The release of the bank stress test is tentatively planned for the afternoon. Then to cap off an already busy week, we have US Non Farm Payrolls on Friday.

After rising for 8 weeks on the trot, the Nasdaq 100 could be due a pull back.

A bear trade predicting that the Nasdaq 100 will be below 1390 in 9 days could return 100% at BetOnMarkets.com.

Economic Calendar for week 4th – 8th May

**Note: All times GMT, not DST**

Monday May 4th:

Bank Holiday UK & Japan.

GE – 06:00 – Retail Sales M/M.
EU – 08:00 – Final Manufacturing PMI.
EU – 08:30 – Sentix Investor Confidence.
US – 14:00 – Pending Home Sales M/M.
US – 14:00 – Construction Spending M/M.
EU – 18:00 – FOMC Member Lacker Speaks.

Tuesday May 5th:

Bank Holiday Japan.

UK – 08:30 – Construction PMI.
EU – 09:00 – PPI M/M.
US – 14:00 – Fed Chairman Bernanke Testifies.
US – 14:00 – ISM Non-Manufacturing PMI.
UK – 23:01 – Nationwide Consumer Confidence.

Wednesday May 6th:

US – 02:30 – FOMC Member Yellen Speaks.
UK – 08:00 – Services PMI.
EU – 09:00 – Retail Sales M/M.
UK – 09:30 – BRC Shop Price Index Y/Y.
US – 12:15 – ADP Non-Farm Employment Change.
US – 14:30 – Crude Oil Inventories.
US – 21:30 – FOMC Member Yellen Speaks.

Thursday May 7th:

FR – 06:45 – Trade Balance.
GE – 10:00 – Factory Orders M/M.
UK – 11:00 – MPC Rate Statement.
UK – 11:00 – Official Bank Rate.
EU – 11:45 – Minimum Bid Rate.
EU – 12:30 – ECB Press Conference.
US – 12:30 – Unemployment Claims.
US – 12:30 – Prelim Nonfarm Productivity Q/Q.
US – 12:30 – Prelim Unit Labour Costs. Q/Q.
US – 13:15 – FOMC Member Evans Speaks.
US – 14:30 – Natural Gas Storage.
US – 19:00 – Consumer Credit M/M.

Friday May 8th:

Bank holiday France.

GE – 06:00 – Trade Balance.
UK – 08:30 – PPI Input M/M.
UK – 08:30 – PPI Output M/M.
GE – 10:00 – Industrial Production M/M.
US – 12:30 – Non Farm Employment Change.
US – 12:30 – Unemployment Rate.
US – 12:30 – Average Hourly Earnings M/M.
US – 17:00 – FOMC Member Lacker Speaks.
US – 17:15 – FOMC Member Evans Speaks.

EU – Europe wide
FR – France
UK – United Kingdom
US – United States
GE – Germany

As expected, the budget was the focus of analysis in the UK last week. The FTSE was largely unaffected by the budget with most companies gathering their earnings from across the globe, not just the UK. Currency markets were the most volatile as traders reacted to the announcement that UK borrowing will hit a peacetime record of £175bn, or 12% of GDP. Darling surprised many by adjusting his forecast for UK growth for 2009 downwards to -3.5%. This puts the treasury’s forecast in line with other institutions such as the IMF, but Darling’s forecasts for 2009 and 2011 are still far more optimistic than any other outside organisation other than the Bank of England.

Considering how inaccurate the government’s forecasts have been so far, it is little wonder that currency traders didn’t believe a word of it, and sold the pound aggressively against the euro, dollar and yen. The pound gave back all the gains made against the euro last week as UK GDP figures released on Friday showed that Darling’s projections may already be overly optimistic.

Increasingly a barometer of global economic confidence, June crude oil contracts closed the week above $51, while curiously; natural gas futures continued their down trend closing the week at $3.37, some 75% down from the peak last June. Gold endured a better week, closing up significantly for the first time in five weeks.

The highlights for the coming week include the FOMC statement on Tuesday and ISM manufacturing on Friday. The UK has a number of economic announcements, including the UK Nationwide house price index on Wednesday, and the Halifax House price index also expected at some point in the week.

Although questions remain over accounting tricks employed by banks and the depth of the stress test from the US government, there could be room for more upside next week on US markets.

A one touch trade predicting that the Dow Jones will hit 8204 in the next 7 days, could return 21% at BetOnMarkets.com.

Economic Calendar for week 27th April – 1st May 2009

**Note: All times GMT, not DST**

Monday April 27th:

GE – 06:00 – GfK Consumer Climate.
UK – 08:30 – BBA Mortgage Approvals.
EU – 16:45 – ECB President Trichet Speaks.

Tuesday April 28th:

UK – 08:00 – CBI Realise Sales.
US – 13:00 – S&P/ CS Composite-20 HPI Y/Y.
US – 14:00 – CB Consumer Confidence.
US – 14:00 – Richmond Manufacturing Index.

Wednesday April 29th:

EU – 08:00 – M3 Money Supply Y/Y.
EU – 08:00- Private Loans Y/Y.
EU – 09:00 – Consumer Confidence.
US – 12:30 – Advance GDP Price Index Q/Q.
US – 14:30 – Crude Oil Inventories.
US – 18:15 – FOMC Statement.
US – 18:15 – Federal Funds Rate.
UK – 23:01 – GfK Consumer Confidence.

Thursday April 30th:

UK – 06:00 – Nationwide HPI M/M.
GE – 07:55 – Unemployment Change.
EU – 09:00 – CPI Flash Estimate Y/Y.
EU – 09:00 – Unemployment Rate.
US – 12:30 – Unemployment Claims.
US – 12:30 – Core PCE Price Index M/M.
US – 12:30 – Employment Cost Index M/M.
US – 12:30 – Personal Spending M/M.
US – 12:30 – Personal Income M/M.
US – 13:45 – Chicago PMI.
US – 14:30 – Natural Gas Storage.

Friday May 1st:

Bank holiday France, Switzerland, Germany & Italy.

UK – 08:30 – Manufacturing PMI.
UK – 08:30 – Net Lending to Individuals M/M.
UK – 08:30 – Mortgage Approvals.
US – 13:55 – Revised UoM Consumer Sentiment.
US – 13:55 – Revised UoM Inflation Expectations.
US – 14:00 – Revised UoM Inflation Expectations.
US – 14:00 – ISM Manufacturing PMI.
US – 14:00 – ISM Manufacturing Prices.
US – 14:00 – Factory Orders M/M.

EU – Europe wide
FR – France
UK – United Kingdom
US – United States
GE – Germany

Crude oil is currently trading around the 48 dollars per barrel mark after the risk of widening bank losses dragged U.S. equities and other commodities lower. Oil’s two-day climb stalled after lenders including Wells Fargo & Co. said credit markets haven’t recovered yet. Adding to the weak crude price is the report from U.S. regarding the oil inventory which rose for a seventh week to its highest level since September 1990.

Trade Of The Day

Here is a good value play: A bull/bear bet, on the FTSE closing below 4005 on April 30th returns a 99% ROI.

Get this news letter by signing up to Bet on Markets.

Try UK Forex Trading

Financials were on fire, lifting global markets with them. Positive headlines hit investors in waves, just when it looked like the recent rally off the February lows was running out of steam. In the UK, Barclays finally closed out the sale of its iShares, with the £3bn fee coming in around average estimates. Some had thought it could go for much more, but there seems to be a general relief that the deal has gone through full stop. Wells Fargo added fuel to the fire by coming in with results that topped analysts’ estimates. Wells closed up nearly a quarter on the day, with most of the UK and US financials up by around 10% on Friday.

Another catalyst for the buying frenzy was the New York Times reporting that all the 19 examined US banks have passed the treasury stress test. The exact results are going to be delayed until after earnings season, but the general relief that there will be no major surprises has flushed traders with confidence.

US jobless figures were dismal, but slightly less dismal than before. The drop in total claims was less than expected, though the continuing jobless claims continues to rise. If there has been a consistent barometer of economic sentiment this year, it is oil and true to form, crude prices closed the week at $52 after dipping below $48 at one point.

The bank of England rate statement was a bit of a non event, as they kept rates on hold as largely expected. The Euro was one of the weaker currencies last week, losing ground against the dollar and falling in value against the pound for the third week in a row.

The coming week starts with a quiet day with European stock markets closed, and no data coming out of the US. Things will pick up on Tuesday with the release of US retail sales, PPI and business inventories. Fed Chairman Ben Bernanke is also due to speak in the afternoon. Wednesday brings further inflation/ deflation data with the release of Core CPI, as well as a host of middle tier economic announcements. Bernanke finishes the week with another speech on Friday, ahead of a number of speeches by US and European central bankers over the weekend.

Last week Barclays rode the quest of a wave as the long awaited sale of iShares was completed, however the sale provided less of a lift to its tier 1 capital ratio than many first thought. The coming week sees earnings season start to build momentum in the US with a number of financial firms such as Goldman Sachs reporting profits. The trend has been positive over the last few weeks, but earnings season could spring some surprises that lead to an increase in volatility in the financial sector. One way to play this is through a one touch trade.

Economic Calendar for week 13th – 17th April 2009

**Note: All times GMT, not DST**
Monday April 13th:

Bank Holiday EU/ FR/ GE/ UK

Tuesday April 14th

US – 12:30 – Retail Sales M/M.
US – 12:30 – Core Retail Sales M/M.
US – 12:30 – PPI M/M.
US – 12:30 – Core PPI M/M.
US – 14:00 – Business Inventories M/M.
US – 14:30 – FOMC Member Evans Speaks.
US – 16:00 – Fed Chairman Bernanke Speaks.
UK – 23:01 – RICS House Price Balance.

Wednesday April 15th

UK – 08:30 – DCLG HPI Y/Y.
US – 12:30 – CPI M/M.
US – 12:30 – Core CPI M/M.
US – 12:30 – Empire State Manufacturing Index.
US – 13:00 – TIC Long-Term Purchases.
US – 13:15 – Capacity Utilization Rate.
US – 13:15 – Industrial Production M/M.
US – 14:30 – Crude Oil Inventories.
US – 17:00 – NAHB Housing Market Index.
US – 18:00 – Beige Book.
UK – 23:01 – BRC Retail Sales Monitor Y/Y.

Thursday April 16th

EU – 09:00 – CPI Y/Y.
EU – 09:00 – Core CPI Y/Y.
EU – 09:00 – Industrial Production M/M.
US – 12:30 – Building Permits
US – 12:30 – Unemployment Claims.
US – 12:30 – Housing Starts.
US – 14:00 – Philly Fed Manufacturing Index.
US – 14:30 – Natural Gas Storage.
US – 17:00 – FOMC Member Lockhart Speaks.

Friday April 17th

US – 00:00 – FOMC Member Yellen Speaks.
EU – 03:00 – ECB President Trichet Speaks.
EU – 09:00 – Trade Balance.
US – 13:55 – Prelim UoM Consumer Sentiment.
US – 13:55 – Prelim UoM Consumer Expectations.
US – 16:00 – Fed Chairman Bernanke Speaks

EU – Europe wide
FR – France
UK – United Kingdom
US – United States
GE – Germany