Market snapshot: is this rally more than just brief relief? 

Share prices are rising, but the mood is hardly jubilant. Our head of markets explains what's driving sentiment right now. 

Left to their own devices following a public holiday in the US, global markets made a tentative recovery from the recent unrelenting pressure, even if such relief has tended to be brief over recent months.

At this early stage, US futures are also pointing higher at the reopening of trade later, although the pervasive sense of caution remains.

Ahead of the Federal Reserve comments to Congress tomorrow and Thursday, a spokesperson reiterated that risks remain substantial, stemming from uncertainty around the Russia-Ukraine war and the possibility of a sharp slowdown in China. Domestically, meanwhile, further economic releases this week including existing home sales will provide further colour.

This follows various readings which have suggested falling retail spending amid weakening consumer confidence and a cooling housing market, all resulting from the upward direction of interest rates in an effort to tame inflation. The general sense of despondency has rattled US markets in the year to date, with the Dow Jones having fallen 18%, the S&P500 23% and the Nasdaq 30%.

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Asian markets were mixed, with the current fears of a significant slowdown being partially offset by hopes that the Chinese authorities stand prepared to offer some monetary assistance as and when the need arises. In the meantime, an already faltering Chinese economy without the more recent enforced lockdowns are keeping investors on edge and unable to sustain any rally opportunities which may present themselves.

For the UK, the calendar remains a central focus, with updates over the course of the week which may underline the increasing pressure facing the economy. Updates on inflation, the Retail Price Index, retail sales and consumer confidence carry a strong theme and will provide some indication as to the current sentiment among consumers. Recent numbers from various retailers have, on the whole, underlined the current woes where an increasing stranglehold on customer wallets is beginning to wash through.

Indeed, often seen as something of a barometer for the UK economy, the FTSE250 index has lost 19% this year, with sterling also weakening in tandem with deteriorating economic prospects.

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The FTSE100, by contrast, has held up relatively well compared to many of its global peers, although the pressure of the last week in particular finally snapped its winning streak.

Now down by 3.5% in the year to date, its attractions nonetheless remain intact for international investors, with its constituents including a host of defensive and inflation-proof stocks, allied to a generous average dividend yield and an undemanding overall valuation.