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Reports UK

UK stock market commentary (April 08, 2014)

April 8, 2014, Tuesday, 07:50 GMT | 03:50 EST | 12:20 IST | 14:50 SGT
Contributed by Capital Spreads

European equities are set to start flat as traders tread cautiously. Whilst the mini tech wreck in the US has weighed on global markets, European sensibilities hadn’t allowed valuations to reach such unfathomable levels so it’s fair to assume that traders don’t see why there should be a wider sell off over US stock specific over optimism.

However, closer to home events in the Ukraine will be adding to the reason why traders remain hesitant now that the Donetsk region has jumped on the referendum bandwagon and pro Russian supporters have taken hold of buildings in Luhansk and Kharkiv. Following the annexation of Crimea, it’s not too far of a stretch to assume that Russia will gladly welcome all the other regions into the Federation.

Pfizer and American Express led the slide in the Dow Jones yesterday with the trading session ending 161 points in the red at 16,261. The start of the earnings season kicks off today and we could see a rebound for the US equities but we notice the short term trend has turned bearish after two days of hefty losses.

The ECB officials played down concerns over deflation in the euro zone saying such risks are for now contained, softening their tone on using QE. As a result the shared currency enjoyed a rebound versus the dollar, recovering 42 pips to 1.3741. Despite that, the outlook for the immediate term remains negative.

Libyan rebels handed over control of two ports to the government thus boosting oil exports for the North African country engulfed in a bitter domestic conflict. The reaction in the energy sector was quick with the WTI crude price dropping steadily and despite the late comeback it ended 18 cents down at $100.74.

Gold prices turned south again losing $7.5 to $1296.8 as investors realized the state of the US economy is dubbed healthy enough to maintain tapering the monetary stimulus. Fear of inflation is nowhere in sight, if anything in Europe there’s deflationary concerns so the precious metal continues to look out of favour.