Betonmarkets.com - week ahead

It was certainly a mixed week for world stock markets last week with Monday's opening slump almost being cancelled out by Thursday's strong rally. The S&P 500 just managed to nudge into positive territory for the week, while the FTSE, CAC and DAX could only were firmly in the red.

US house prices fell by 6.8% in April and existing home sales fell by 3.0%. The US housing market at the epicentre of the credit crunch has stopped cliff diving but prices are still marching downwards. The pace of the global meltdown has slowed, but judging by last week's US unemployment claims increase, any meaningful recovery will be long and drawn out.

After the frantic days of the first quarter, perhaps a quiet crawl back to growth might be best outcome for the next few years. Indeed, the World Bank dimmed the lights on the nascent global economic recovery after predicting that progress would be subdued and economic output will drop by 3%.

On currency markets, the pound managed to finish the week flat against the dollar, but lost some ground against the euro. The euro also managed to make good gains against the dollar and held firm against the Japanese Yen. Gold recovered well from a mid week dip and closed slightly up on the week. Oil fared slightly worse, finishing the week just below $70 for the first time in three weeks.

Next week's action starts with the UK's Nationwide House Price Index on Tuesday. There have been conflicting prices reported by competing sources recently so there is uncertainty over the forecast numbers which could cause some volatility in sterling pairs. UK current account figures at 12.30 GMT could have a similar impact. The Halifax House Price Index is also scheduled for release next week, but the exact date has not been determined.

Australian retails sales are released on Wednesday and are expected to show a slight improvement on the previous month. The Australian economy continues to show reliance compared to other western nations. Around midday we get the warm up to US Non Farm Payrolls with ADP employment data. It could be a volatile period with ISM manufacturing and pending home sales following this just a couple of hours later.

On Wednesday we have some central banking action with a number of MPC members speaking and the BOE credit conditions survey due. These are followed by the ECB press conference. US Non Farm payroll is brought forward one day to Thursday because of the bank holiday. The EUR/ USD exchange rate could be in play given the amount of data released what will be in effect the final trading day of the week. With US markets closed on Friday, Forex markets could be quieter than usual.