Another week goes by, and world markets put more distance between current levels and the lows of March. The broad S&P 500 managed to register its sixth positive week on the trot, something that would have seemed impossible just a month ago. Leading the charge has been the resurgent financial sector with major US banks beating analysts’ estimates with their latest earnings announcements.

Wells Fargo, Goldman’s, JP Morgan and Citi Group all surprised
to the upside, though many have questioned the sustainability of these
results, with government bailouts and accounting changes playing a
significant role in some of the outperformance. For example, some questioned
the ‘orphaned’ month in Goldman’s earnings, as they switched their accounting
period from December to January.

British banks also performed well, but it was Barclays that stole the show.
Lloyds TSB hit its highest level since February, and Barclays pushing above
the £2.00 level for the first time since November last year. Barclays has
been the strongest performer across the remaining UK banks over the last
three months, as speculation mounts that it may be able to sell its entire
BGI division including iShares at a more attractive price.

There has been mixed news from the US too, with weekly jobless claims coming
in below analysts’ estimates. Continuing claims actually reached 6.02
million, an all time high, but so far markets seem more focused on the
headline number. US jobs data is still woeful; it just seems that the
contraction is slowing slightly.

US housing starts were at near record lows, while foreclosure activity peaked
at its highest level since records began in 2005.

Despite all this, it has been a relatively good week for the US dollar,
clawing back losses made in the early part of the week against the pound. The
Euro continues to weaken, falling hard against the dollar and sterling last
week.

The price of Gold fell as economic optimism improved slightly, but at the same
time, oil dipped below $50 a barrel, as China announced that economic
activity grew substantially less than the same period last year.

Next week is relatively quiet with UK CPI the stand out data point on Tuesday.
Wednesday sees the release of the minutes from the last MPC meeting, along
with the latest claimant count changed data. At midday all eyes will be on
the Alistair Darling’s budget announcement. Higher taxes and lower public
spending are expected to announced, to help offset record government
borrowing. Thursday is a busy day with a raft of middle tier European
announcements and US existing home sales. Friday brings a number of upper
tier announcements; including UK GDP & retails sales, as well as US durable
goods orders, and new home sales.

The rally over the last few weeks has lasted longer than many thought it
would. The debate now rages as to whether this is the start of a meaningful
recovery or simply a ‘bear market rally’. In either case, it is perhaps
unlikely markets will be able to maintain this momentum for the rest of the
year without some sort of pull back in the meantime. This could be the start
of the recovery, but it may take longer than many people hope.

A No Touch trade predicting that the Dow Jones (Wall Street) will not touch
10,000 at any time during the next 6 months could return 28% at
BetOnMarkets.com.

By Mike Wright
Tel: +448003762737
Email: editor@my.regentmarkets.com
Url: Betonmarkets.com & Betonmarkets.co.uk

About Regent Markets Group: Regent Markets is the world's leading fixed odds financial trading group. Through its main multi-awarding winning websites, BetOnMarkets.com and BetOnMarkets.co.uk, it has established itself as the leading global provider of a unique, powerful way to trade the world's major financial markets. The number, length and variety of trades available to our clients exists nowhere else in the world. editor@my.regentmarkets.com Tel (+44) 08000 326 279

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Do your own due diligence.

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