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Reports UK

UK stock market commentary (July 21, 2014)

July 21, 2014, Monday, 05:59 GMT | 00:59 EST | 09:29 IST | 11:59 SGT
Contributed by Capital Spreads

European equities are set to edge a fraction higher on the open buoyed by a strong finish in the US on Friday but a cautious mood still persists. Although US markets seem to be able to completely shrug off the geopolitical risks, Europe and Asia can’t quite shake off the possible ramifications of more sanctions against Russia and the intensifying situation in the Middle East. With the turn off events still evolving at a rapid pace, traders will continue to struggle to accurately discount what is most relevant.

It appears the renewed crisis in the Ukraine had a short lived bearish effect as the US equities rebounded on Friday, by and large gaining back most of the previous day’s steep losses. However, it has to be said that most of the US companies posting earnings results beat the estimates, a feature which undoubtedly helped in maintaining investors’ interest in equities. So with Google doing just that, the Dow Jones recovered 138 points to 17,098.

Heightened geopolitical turmoil with both Gaza and Ukraine seeing the conflicts escalating, has sparked demand for the safety of the US dollar. Nonetheless, towards the close encouraging corporate data put investors at ease which felt compelled to take on more risk. The EUR/USD pair ended flat around 1.3525.

Profit taking ahead of weekend and a rebound for equities took its toll on the energy complex as investors pushed the WTI crude prices $1.06 down to $101.79. On a weekly basis the picture was different though with the first gain in a month, mainly on falling US crude supplies.