FTSE 100: Closed Friday on its high but on lower volume. Resistance at 5000 has proved to be a reasonable barrier during the past week and this could trigger a mild pullback; before the market is likely to resume its March, towards 5,500.

The asset classes overnight would suggest that some profit-taking could now re-enter the market, temporarily, at least. The impending anniversary (Tuesday) of Lehman’s collapse has of course been met with an increasing amount of media attention and had re-ignited to some degree the fear that given the 40%+ rally seen in most equity markets since March, we may have come too far – too fast. As such, equities, commodities, and commodity currencies have fallen overnight whilst the Yen has risen. Meanwhile, the sentiment towards the floundering US dollar has been further dented by the US imposing large tariffs on China’s tyres for the next three years and the market is expecting China to retaliate with some measures against the US. A full blown trade war at this stage is unlikely; but these measures, when the global economy is still in an early stage of recovery, are unhelpful. As such, the dollar is likely to come under further pressure in European trading.

This week we will get more clear signs on how the US economy is recovery. Tuesday, sees the release of retail sales with the headline figure expected to be strong due to the cash-for-clunkers scheme but economists will be more interested in the ex-autos number given its surprise 0.6% pull back last month. Tuesday, also sees the release of the first major regional manufacturing survey for September from the NY Fed, this will be followed on Thursday by the Philly Fed. On Wednesday, we start to see the release of the housing data with NAHB homebuilder’s index followed on Thursday by housing permits. Also on Wednesday, we are expecting a rise in industrial production coupled with benign CPI data. There is no data due for release on Friday but it is a quadruple witching day so stock markets could

be volatile.

In Europe, the calendar is reasonably quiet. Germany’s ZEW report on Tuesday is the highlight of the week in Euroland. In the UK, the RICS survey is due, whilst on Tuesday we have July CPI, Wednesday, labour market data and Thursday, August retail sales.

Sources: Reuters: BBC: Bloomberg: Lawshare: Deutsche Bank (db): Proquote: Financial Times: Wall Street Journal: CLSA: Sharescope: Market News. Capital Economics: CNBC: Wikipedia:

Please note this report provides a guide to some of the relevant areas that individual investors should consider discussing with an authorised adviser in relation to their specific circumstances, it does not constitute individual advice. As a result no action should be taken or refrained from being taken as a result of its content.