Oil on water?

Despite some positive corporate news, oil price concerns remained very much to the fore last week, with the market continuing to trade in narrow range, before reacting positively to better than expected US jobs data at the end of the week.

Quentin Smith, from OMAM UK, reports that although the price of crude remains at high levels, it eased slightly over the week as OPEC agreed to raise production quotas, which is expected to add about 1m barrels a day to the market.
 

Mortgage lending rose a record £9.8bn in April, suggesting that higher interest rates have yet to curb consumers' appetite for borrowing and spending. 
 

Lending rose from £9.2bn in March and was above the previous peak of £9.6bn reached in September 2003.  Expectations were for gain of £9.6bn.  Net consumer credit, including credit card and store card loans, rose £1.33bn in April after a £1.65bn gain in March. 
 

Net credit card lending, rose £485m in April after a £988m increase in March.  New mortgage approvals fell to 124,000 in April from 127,000 in the preceding three months, with the value of these loans falling to £26.1bn from £26.6bn.
 

Over the week the All-Share and FTSE 100 both gained 0.5%, with midcaps 0.7% higher and smallcaps unchanged.  Sector performance was mixed, with no clear theme emerging.
 

Key this week is the monthly meeting of the Bank of England’s Monetary Policy Committee, with opinion divided as to whether interest rates will be raised for a fourth time in the current cycle. 
 

Although the MPC has abandoned its commitment to gradually raising rates, it may wait to assess the impact of the May rise before tightening again. 
 

It is hoped that April industrial production data will surprise on the upside, as recent official data has fallen short of survey expectations, although sterling strength and eurozone weakness may continue to limit output growth. 
 

The May BRC sales monitor is likely to continue to show retail sector strength.  Finally, April trade data may show a slight worsening of the deficit if imports show signs of a pick-up.