Equities stabilised in early trading today as resource stocks bounced after taking the lion’s share of the selling yesterday.

Commodities, especially crude oil are a barometer of global economic sentiment at the moment, so the afternoon retreat is telling. Bereft of any positive catalysts, markets starting to stumble last week.

Now the news flow is churning out some heavy data, but unfortunately it is not good news. US house prices fell by 6.8% in April and existing home sales fell by 3.0%. The US housing market at the epicentre of the credit crunch has stopped cliff diving but prices are still marching downwards.

Tomorrow promises to be a very busy day with the UK inflation report due as well as US new homes sales and the FOMC rate statement. No change is expected, but traders are baying for clarity from the embattled clarity.

Rumours are rife of rate hikes before the year end, undoubtedly contributing to interbank lending creeping up again, which is in turn hindering any chance of meaningful recovery in the US housing market.

Tomorrow’s FOMC statement could see some volatility increase in the dollar with a dovish statement from the Fed putting more pressure on the greenback. This could be good news for the pound.

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