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Reports UK

UK stock market commentary (April 30, 2014): Earnings Drive Markets

April 30, 2014, Wednesday, 06:24 GMT | 01:24 EST | 09:54 IST | 12:24 SGT
Contributed by Capital Spreads

Earnings really are driving the markets this week. The bulls are riding waves of good economic data, and solid earnings have consequently pushed markets back in the direction of new highs. Good, safe news on the Russian front has reassured investors, and after a deep breath the economy looks in good health. Equities will open small down today following Twitter and EBay’s mixed earnings releases post market. Heavy volume in these stocks show the tech sector is still under some pressure and many see them overvalued. As for tomorrow’s rate decision, no surprises are expected and a $10bn reduction in asset borrowing seems to be the general consensus. I wouldn’t go as far to say this won’t affect the market as investors will look for any sign to suggest an early or delayed interest rate hike.


The US shares rallied led by technologies stocks topping estimates in the latest string of corporate results. At the same time the economic data painted an encouraging outlook with the home prices numbers confirming expectations and just a slight dip in consumer confidence. The Dow Jones gained 62 ticks to 16,529 and remains not far from the record close of 16,598.


Ahead of inflation data release for the euro zone anticipated to stay below the ECB target of 2%, the shared currency dropped 40 pips versus the greenback closing at 1.3812. The warning sign was the German preliminary CPI declining 0.2% against forecast of only 0.1% drop fuelling speculation the ECB will have no alternative but ease its monetary policy.


As the US and European Union extended sanctions against Russia yesterday, the WTI rallied reaching above $102.00 at some point in intraday trading. However, estimates that crude inventories in the US are at an 83 year high took their toll on the oil prices, pushing the WTI back down in afternoon session ending 16 cents in the red at $100.73 a barrel.


Initially, gold rose with crude oil on an escalating crisis in Ukraine, breaking above the $1300.00 mark. But later on, a rally in equities reversed trend for the precious metal which ended rather flat for the day at $1296 as investors went for higher yielding assets.