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Reports UK

UK stock market commentary (April 09, 2014)

April 9, 2014, Wednesday, 05:52 GMT | 01:52 EST | 10:22 IST | 12:52 SGT
Contributed by Capital Spreads

European equities are set to open mixed as traders continue to tread cautiously. Yesterday’s minor losses belie the apprehension that seems to have descended on markets at the moment. Negative cues seem to be popping up out of nowhere, like the US tech sell off and the Ukraine flaring up again, so traders are highly cognizant that if you get a few more negative news stories we could easily see the balance tipped in favour of a more sustained sell off.

There’s usually a bit of trepidation in the session before the FOMC minutes are released but considering the amount of flip flopping from Janet Yellen after the meeting, anything of influence will probably be shrugged off. Instead, today’s unease is likely to come from traders scanning the horizon for potential black swans.

Amid the start of the earnings season, we saw a rather volatile session for the US stocks yesterday. After an initial selloff, technology lifted the spirits pushing for a rebound in the afternoon but still the Dow Jones closed 17 ticks down at 16,246. The start of the corporate results was given by aluminium producer Alcoa which surpassed estimates in the first quarter as reported in the afterhours trading.

A pickup in inflation expectations for the euro area came to the ECB’s help which already promised to use additional measures to provide price stability. In reaction to that the euro pushed higher versus the US dollar closing 42 pips up at 1.3797 after a short trip above the 1.38 mark during the mid session.

An escalation in the Ukrainian conflict renewed fears over energy supply in the Black Sea region and quickly spilled over pushing the WTI crude prices $1.65 up to $102.35. The steep climb was also supported by news that Libyan rebels are sticking to their oil sharing conditions for allowing ports opening.

The geopolitical tensions in eastern Ukraine was back in the spotlight yesterday which in turn pushed gold prices $11.7 higher to $1308.5 on safe haven demand. At the same time, a weaker greenback made dollar denominated gold look cheaper attracting buying interest.