Please find below the Afternoon Report from David Evans, market analyst

It was a good start in Europe this morning, but US markets gapped higher
this afternoon and today’s rally in equity markets has stepped up a
gear. Today’s ISM manufacturing data contracted at its slowest pace for
eight months. The economic crisis is still very real but, there are ever
increasing signs of a recovery from the world’s biggest economy. Like a
fairground ride, the rollercoaster has completed its worst loops and gut
wrenching turns and appears to be slowing down towards the end of the
ride. At least that is what investors are hoping is happening.

There is certainly evidence of confidence returning to markets with cash
allocation falling for most managed funds as investors pour money back
into the stock market. We could be seeing a great unwinding of the
extreme flight to safety that happened post Lehman Brothers. Now it
appears traders want to pick up where they left off, pushing resources
stocks higher and betting on higher inflation in the future. Gold hit
$988 today and oil pushed to over $68. It is no coincidence that the so
called BRIC nations have seen their stock markets rally strongly in
2009, with the Russian stock market up 70% this year. Demand from
emerging nations such as China fuelled the commodity boom prior to the
credit crunch, now it appears they are leading the recovery with oil
following in the tail wind.

Despite the strong rally, the S&P 500 has gapped up this morning and
gaps tend to get filled more often than not. A one touch trading
predicting that the S&P 500 will close the gap and touch 919 in the
next 7 days could return 78%.