With the strike in Scotland and the resultant cut in supplies from the North Sea, oil has pushed to a new high of $120 per barrel. In the Far-East equities have rallied on the hopes that the worst of the sub-prime issues are over. The USD has rallied too against major currencies, with Sterling fairly steady at these levels against the euro.

UK banks appear to be queuing-up to tap the rights issuing market with another large name rumoured to be about to make an announcement. These rights issues should help to shore up the capital base of banks that have suffered in the last few months, though it remains to be seen what appetitive investors will have to continue doing this.

The main economic news focus this week will be on the US Federal Reserve decision on Wednesday, where the market expects a cut of 0.25% before a period of respite, while the effects of recent cuts are monitored. Last month the Fed cut its key market rate by 0.75% to 2.25%, Wednesday’s expected cut, (if it happens), will bring rates to 2% the lowest level since November 2004. This week’s UK economic data will focus on PMI data for April due on Thursday, these should provide a snap-shot of economic activity levels at the start of the second quarter. On Tuesday we have the March lending figures from UK building societies and the CBI’s distributive trade survey for April.

Have a good day.

For the full information, please download today's HSBC Economic Update.