Morning Call by Greg Secker

Britain’s top share index was flat by the close of holiday-thinned trade on Friday as gains in miners offset profit-taking in energy and defensives following sharp gains the previous two sessions. The FTSE 100 index closed at 4,243.22 after gaining 1.3 percent on Thursday. The UK’s blue-chip index in April posted its biggest monthly percentage rise since 2003 and is up 22.6 percent since a six-year low point on March 9.
Analysts are slightly more optimistic on the economic outlook after some improved data. Defensive pharmaceuticals and tobacco stocks were the biggest drag on the index with AstraZeneca leading the pack followed by GlaxoSmithKline and British & American Tobacco.
Stateside, the Dow Jones industrials shot up more than 200 points and had their first finish above 8,400 since 13 January, while the S&P 500 rose 3.4 percent on Monday and eradicated the last of its losses for 2009.
A double dose of good housing news ignited the advance: Pending U.S. home sales rose more than forecast and had their second straight monthly gain, while construction spending rose unexpectedly in March after five consecutive declines.
This added further momentum to a rally that began on 10 March - with Monday’s gain, the S&P has soared 34.1 percent in the 39 trading days since the rally began, its steepest gain over that many days since 1933, while the Dow is up 28.7 percent.
The S&P 500 is now up 0.4 percent for 2009, while the Dow is still down 4 percent for the year.
Yesterday, Monday 4th May, was a Bank Holiday both in the UK and Japan. Elsewhere, figures were released in the US for Pending Home Sales m/m and Construction Spending m/m both showing an unexpected and significant improvement. In Switzerland the PMI (SVME) index was also more positive than expected. In Germany, however, Retail Sales m/m weakened as did the Australian HPI q/q which indicated a 2.2% fall in Australian house prices in the past quarter.
In Forex-related data due for release today Australian Building Approvals m/m are expected to show a large contraction and AUD interest rates are expected to remain on hold at 3%. In the UK we have the Halifax HPI m/m due for release today and is expected to show a slowdown in house price deflation. Also in the UK today the Construction PMI is expected to show a small improvement as is the UK Nationwide Consumer Confidence survey. In the US today the important ISM Non-Manufacturing PMI is due for release and is expected to increase to 42.5 getting closer to the key figure of 50.0 which would be indicative of US services sector expansion.
Overall, a very heavy news and data week this week so care required when trading.