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Reports UK

UK stock market commentary (April 14, 2014)

April 14, 2014, Monday, 05:42 GMT | 00:42 EST | 09:12 IST | 11:42 SGT
Contributed by Capital Spreads

European equities are set to start on the back foot as last week’s negative sentiment remains firmly intact. Quite what exactly has markets in such a bearish frame of mind is hard to put a finger on and pundits have been spewing out justifications for the moves lower from overvalued tech stocks, China fears and even traders squaring their books ahead of the Easter break.

However, one thing certainly adding to the risk off sentiment will be the developments in Ukraine. There had been hopes that the situation may have climaxed in the annexation of the Crimea, but with pockets of pro Russian support springing up all over the east, and authorities in Kiev looking like they’re about to lose their patience with diplomacy, it’s clear that this is only the opening chapter in what could be formative moment for geopolitical relations.

The Dow Jones slid on Friday in a volatile session of trading. Initial gains early in the session were erased as worries emerged over health care companies with biotech stocks being amongst those hit hardest. The Dow Jones fell by 0.9 percent on Friday, almost 144 points to 16026 continuing the trend for the week.

Positive data in the US in the form of better than excepted PPI helped support demand for the greenback on Friday. The Euro Dollar ended the day fairly flat on closing at 1.3885 edging slightly lower from the previous days close. The dollar also benefited from the sell off in the equity markets as investors looked to invest in the safe haven dollar.

West Texas Intermediate oil climbed to a five week high on Friday off the back of rising consumer confidence in the US for April. WTI May rose 0.3% on the New York Mercantile Exchange closing at $103.74 a barrel. The contract has settled the week 2.6% higher in its best performing week of 2014.

Spot gold fell from its two and half week high on Friday with the precious metal falling 0.1% to $1,316.58. Gold seems to be losing interest from investors due to rising competition from other investments such as treasury bonds. However a sharp fall in gold prices in unlikely given recent weaknesses in the equity markets and rising uncertainty in Eastern Europe.