Against all expectations, stock markets around the world managed to extend their winning streak and close up for the 5th week in a row. It was a choppy week until Friday when US markets pushed hard to close at their highs of the week.

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.

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US markets closed Friday up around 1%, which in the context of recent volatility is not really much to write home about. Recently, US markets have had an average trading range of 2% per day, which is actually down on the recent peak of 4% per day. In volatility terms, things seem to be quietening down, and this is usually a positive for equities which loath the unknown more than bad news. When the economic data becomes more predictable, markets can move to price in bad news, as appears to have happened today.

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After a volatile 5 days, world stock markets just managed to close last 5 days in the black. It was a week of two halves with the good work from the start of the week being undone in the second half as traders slipped into reverse gear on Thursday and Friday. At least markets managed to hold the gains from the previous week which in the context of the bear market is no mean feat.

Markets shot out of the gates last Monday, and more importantly, managed to hold those gains for most of the week. The news flow continued to be mixed, but investors chose to take a ‘glass half full’ rather than a ‘glass half empty’ philosophy. For example on Wednesday, markets were buoyed by the better than expected US durable goods orders. Traders chose to focus on the short term improvement in these figures, rather than the fact that prices were down 22% since February 2008, registering their second largest year on year fall. When confidence is shot to pieces, this positive spin would not happen, but now the bulls have a spring in their step and are willing to take some risks.

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After a volatile 5 days, world stock markets just managed to close last 5 days in the black. It was a week of two halves with the good work from the start of the week being undone in the second half as traders slipped into reverse gear on Thursday and Friday. At least markets managed to hold the gains from the previous week which in the context of the bear market is no mean feat.

The massive influx of money from the US Fed and UK Treasury led to a substantial increase in both crude oil and gold prices last week. Crude prices pushed through the $50 level for the first time since the start of 2009, while Gold endured a remarkable week, trading as low as $883 and finishing at $951. It is no coincidence that these two markets are trading higher in tandem as they are both linked with inflation expectations. Gold is traditionally seen as an inflation hedge, while oil is a barometer for global economic activity. With the Fed turning on the printing presses yesterday, inflation fears are once again creeping into investor’s consciences.

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There were genuine signs of emerging optimism in stock markets last week. Confidence has been largely absent so far in 2009, with every attempted rally squashed before it really had chance to get going. There is a growing sense that this time round things are different, and this belief will only grow further, if markets can survive the next week or so without dropping too far below last Thursdays low. The next few weeks could be a real test. If markets are able to maintain these levels without giving up too much ground, then more buyers might come out of hiding and the recovery could gain momentum.

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