An insider's guide to the market From an investment perspective, the war in Iraq is now effectively over and participants in the investment markets have reverted to focusing on the more familiar territory of data releases and price movements in assets and commodities.

While developments in the Middle East are likely to be in the news for a long time, near-term uncertainties are now much reduced given that the Saddam Hussein regime has been toppled.

This has already been reflected in calmer conditions in the oil markets and in the gold market.

Gold, seen by some as a safe-haven investment in times of crisis, reached a high of around $390 an ounce earlier this year but is currently trading at $325 (€300) an ounce.

Oil prices also rose sharply over the past six months with the price per barrel at times going well above $30. The current oil price is now hovering at $25 per barrel and with summer approaching it may well move lower in coming months. If the oil price remains in the $20-$25 range for a sustained period, it would have a beneficial impact on already low global inflation rates.

Turning to general economic developments, the news emanating from Europe continues to point towards weak economic conditions particularly in the larger economies. However, now that the war in Iraq seems to have reached a conclusion, all eyes are refocusing on the economic portents from the US economy.

In contrast to Europe, the economic data coming out of the US have been almost as volatile as the stock market. In the US disappointing economic data have tended to be quickly followed by more upbeat information. The strength or otherwise of consumer spending is a prime example.

In February and March, surveys of US consumer confidence fell sharply suggesting that consumer spending was about to decline sharply. However, retail sales figures for March showed that there was a 2.1 per cent rise over the February level. This was the largest monthly rise since October 2001. Although this indicator suggests that consumer spending may be on the increase,news from retailers has been poor.

The giant Wal-Mart retail company recently reported that it was experiencing slower sales and indeed we can see that Waterford Wedgwood is suffering from a sharp decline in demand for luxury items.

Therefore, the signals from retailing companies seem to lend credence to the more negative consumer confidence surveys.

Given that consumer demand accounts for such a high proportion of the American economy, a resumption in growth in such spending is a precondition for an overall improvement in the American rate of economic growth.

While the current data releases are giving mixed signals, an assessment of the "bigger picture" suggests that an economic recovery could be under way by the second half of the year.

A key ingredient is the US electoral cycle, and with presidential elections due next year, President Bush has every reason to focus on creating a "feel-good" factor in the US economy. Irrespective of the geopolitical situation, Americans will probably still vote with their pocketbooks.

Reflecting the lifting of the military uncertainties, equity markets have generally improved over the past month. However, this recovery in share prices may also reflect a sense amongst investors that the economic news may well improve in coming months.

As the table shows, the recovery in prices over the past month has been significant. The S&P500 index has risen by 4.2 per cent while the FTSE 100 and the Eurotop300 have risen by 5.7 per cent and 6.0 per cent respectively.

Despite these recent gains, the year-to-date returns are still negative. In contrast, the ISEQ Overall index has now clawed its way into positive territory with a year-to-date return of 1.2 per cent.

In the US, companies will be reporting quarter-one earnings in the coming weeks.

These financial reports will reflect weak economic conditions over the period and therefore are likely to test the resilience of the recent recovery in share prices.

However, if equity markets take these results in their stride, it could well signal that the investment environment over the second half of the year may be much improved. every reason to focus on creating a feel-good factor.