Market friendly election results from India got equities off to a good start last week, and despite slipping into reverse gear midweek, global stock markets managed to close the week in the black.

Barclays was firmer on speculation that Blackrock and The Bank of NewYork Mellon may compete to acquire the BGI unit. Barclays seemed unaffected by reports that the creditors acting on behalf of Lehman Brothers are claiming foul play in the rushed purchase of the former US brokerage unit.

Elsewhere, Goldman’s helped to boost the financial sector in the US with an upgrade to Bank of America. It wasn’t plain sailing all the way for financials though with Lloyds dropping over 25%. Lloyd’s drop was mainly an adjustment in relation to the end of an offer to buy discounted shares. This was a technical adjustment that appears to have been largely accounted for. However, of more worry is the news that Lloyds is under scrutiny from the EU in relation to the government assistance it has received at the depths of the crisis. Lloyds may be forced to sell core assets in order to raise cash to buy the shares back from the government.

At the end of the week, Trader’s had one eye on the long weekend making Friday an unusually quiet day. Markets appear to have got a little too confident that the so called green shoots were leading to a meaningful and sustained economic recovery. What we saw on Wednesday and Thursday was a sudden realisation that we’re not out of the woods yet. US unemployment continues to rise as US consumers, the life blood of the world’s biggest economy, continue to tighten their belt. We had the credit crunch when banks were refusing to lend, now we have the shopping crunch with people refusing to spend.

Next week’s economic announcements of note include US consumer confidence on Tuesday and existing home sales on Wednesday. Thursday is a busy day with UK CBI sales data in the morning, followed by US durable goods orders, unemployment claims and new home sales. Friday’s top announcement is US preliminary GDP data.

The value of US commercial real estate continues to plunge, as the number of high profile shopping malls expected to close in the US this year hits 100. While stock markets slept on Friday, credit and fixed income markets were active, with US treasuries getting slammed on Friday. On Thursday it was UK Gilts that were hit as Moody’s downgraded UK government debt, now traders are speculating that the US government could also lose its AAA rating. The pound was hit, but managed to hold its ground relatively well after the initial shock from the Moody’s announcement. Gold appears to be taking up the slack, as investors hunt for the combination of safety and inflation hedging that gold is perceived to provide.

There have been many false dawns for gold since it hit $1000 in February, but now with inflation creeping back onto the agenda, conditions could be right for a sustained rally.

A One Touch trade predicting that Gold/ USD will hit $1000 in the next 30 days could return 112%.

Economic Calendar for week 25th – 29th May

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

PLEASE NOTE – All times GMT

Monday May 25th:

Bank Holiday UK, US

GE – 08:00 – German IFO Business Climate.
EU – 10:00 – Buba President Weber Speaks.

Tuesday May 26th:

GE – 06:00 – GfK German Consumer Climate.
GE – 06:00 – German Final GDP Q/Q.
GE – 06:00 – German Import Prices M/M.
FR – 06:45 – French Consumer Spending.
EU – 08:00 – Current Account.
EU – 09:00 – Industrial New Orders M/M.
US – 13:00 – S&P/CS Composite 20 HPI Y/Y.
US – 14:00 – CB Consumer Confidence.
US – 14:00 – Richmond Manufacturing Index.

Wednesday May 27th:

UK – 08:30 – BBA Mortgage Approvals.
US – 14:00 – Existing Home Sales.
US – 14:00 – HPI M/M.

Thursday May 28th:

UK – 01:25 – MPC Member Tucker Speaks.
GE – 07:55 – German Unemployment Change.
EU – 09:00 – Consumer Confidence.
UK – 10:00 – CBI Realised Sales.
US – 12:30 – Core Durable Goods Orders M/M.
US – 12:30 – Unemployment Claims.
US – 12:30 – Durable Goods Orders M/M.
US – 14:00 – New Home Sales.
EU – 14:15 – Buba President Weber Speaks.
US – 15:00 – Crude Oil Inventories.
UK – 23:01 – GfK Consumer Confidence.

Friday May 29th:

GE – 06:00 – German Retail Sales M/M.
EU – 08:00 – M3 Money Supply Y/Y.
EU – 08:00 – Private Loans Y/Y.
EU – 09:00 – CPI Flash Estimate Y/Y.
EU – 09:15 – ECB President Trichet Speaks.
US -12:30 – Prelim GDP Q/Q.
US -12:30 – Prelim GDP Price Index Q/Q.
US – 13:45 – Chicago PMI.
US – 13:55 – Revised UoM Consumer Sentiment.
US – 13:55 – Revised UoM Inflation Expectations.

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