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Reports UK

UK stock market commentary (August 04, 2014): Blatantly a dead cat bounce

August 4, 2014, Monday, 06:37 GMT | 01:37 EST | 10:07 IST | 12:37 SGT
Contributed by Capital Spreads

European equities are set to edge up on the open. Geopolitical uncertainty in the world still remains high but a small amount of relief has crept into sentiment as the less than impressive US jobs data on Friday eases the chances on an immanent rate hike from the Fed. However, despite the small bounce, the major indices still remain firmly entrenched in a down move and there doesn’t appear to be any clear sign of a bottom being put in anytime soon.

The US added 209,000 jobs last month, less than initial expectations keeping investors nervous the world’s biggest economy might just begin to stutter. That extended the losses for the Dow Jones to 16,482, a 95 points slump for the day led by the likes of Goldman Sachs and JP Morgan.

As the US nonfarm payrolls data disappointed, market participants were quick to speculate the Fed will delay raising interest rates. In turn, investors rushed out of the greenback pushing the EUR/USD pair 33 pips higher to 1.3422. Later this week the European Central Bank will come itself under scrutiny at its interest rate meeting.

The WTI crude prices failed to post a rebound, trading not far from their six months lows as the weak employment figures reignited the debate regarding the timing of rates hiking. It felt like the energy complex posed to reassess, waiting for further developments to offer direction with the WTI closing near flat around $97.65.

As the chances for maintaining interest rates low have now increased, investors returned to gold pushing its price $9.7 up to $1292.2. Despite another round of better than expected corporate season, the process of jobs creation is struggling to keep up, so this concern the equity markets might have gone up too far has shifted some interest into the precious metals.

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