The FTSE has gone from it’s lowest point of 2008 (on March 17th) at 5414.40 to its highest point of the year closing at 6270.80 yesterday, 8th May. This represents a rise of over 15.8 per cent in just over eight weeks. At its close yesterday the FTSE stood just over 7.25 per cent away from it’s five year high of June 2007 (just before the start of the credit woes). The DOW over the same period has risen 7.47 per cent and at the close yesterday stood 9.53 per cent away from its five year high. Looking back we can see where the rally has come from but looking forward the market pundits are split on whether this is a bear rally (upward correction of an otherwise downward trending market) or a genuine bull market rally destined for new highs.

In the US Over the last couple of weeks good corporate results across almost all sectors and well received economic data has buoyed the markets. Figures from retailers showed that the all important American consumer is still spending, all be it in cheaper stores on essential goods. Discount retailers (Walmart and Cosco) were boosted by forecast beating increases in retail sales at the expense of higher end retailers. As well as retailers, technology stocks continued to add support to the markets and with rampant oil prices the oil giants have played a big role as well.

The FTSE over the preceding weeks has been driven higher yet again from strong commodity stocks, oil companies and at times financials. This week the market benefited from a vein hope of an interest rate cut from the Bank Of England which was dashed on Thursday when they did the expected thing and kept rates on hold.

Today the markets have retreated on yet more fall out from the credit crunch. AIG, the worlds largest insurer reported a loss of $7.81 billion (its second straight quarterly loss) and revealed plans to raise $12.5 billion in the coming months. AIG’s announcement coupled with oil surging over $126 a barrel spooked investors and at the time of writing the DOW has shed over 114 points (0.89 per cent). In the UK stocks fell across the board with miners, retailers, homebuilders and financials all represented in the top fallers.

Next week brings crucial inflation updates from the PPI (Producers Price Indicators) on Monday and the CPI (Consumer Price Indicators) on Tuesday. On Wednesday, probably the most closely watched release of the week, is the Bank of England’s latest quarterly inflation report which should give further hints as to the next rate decision. In the US next week we have Retail Sales data on Tuesday and US CPI data on Wednesday.

On the company front there are also some important announcements, most notably concerning the banking sector and housing sector. HSBC and Barclays are due to release trading statements on Monday and Thursday respectively, with Barratt Development releasing theirs on Wednesday. Of those companies announcing full year results retailers Sainsburys and REIT Land Securities will likely provide the most influential insights.