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Reports UK

UK stock market commentary (June 09, 2014): Being a bear is an exercise in futility

June 9, 2014, Monday, 06:11 GMT | 01:11 EST | 09:41 IST | 12:11 SGT
Contributed by Capital Spreads

European equities are set to start with a pop today as bullish closes in the US on Friday and a buoyant Asian session overnight indicate that the rally still has some more legs in it. It’s a reasonably quiet week on the economic calendar front so there’s little for traders to get apprehensive about and play it cautious so we could see the bulls stampede. Even though the indices are busting out to new highs though, it’s remarkable how negative traders are feeling about t this rally evidenced y the amount of clients that keep betting against it and getting short. Until we get all the bears capitulating and stories like ‘Dow 36,000’ being splashed across the media again, the top is probably still some way off.

By and large the 217,000 advance in the US hiring was widely anticipated marking the fourth consecutive month with more than 200,000 jobs created. The jobless rate held at 6.3% and this steady improvement seemed to have pleased investors who pushed the Dow Jones to new all time highs of 16,941 and finished 108 points up for the day.

While the ECB President Marion Draghi reaffirmed his willingness to act again after cutting deposit rates to minus 0.1% the market did not really seem convinced. After posting a rebound a day earlier, the shared currency resumed its slump versus the greenback ending 18 pips lower to 1.3644. It’s true that on a relative basis, the optimistic outlook about the US economy boosted demand for the dollar, thus hurting the euro.

An encouraging US nonfarm payrolls data with employment reaching pre-recession peak, easily spilled over into the energy complex pushing crude prices up. The WTI crude in particular gained 32 cents to $102.76 despite a slightly stronger dollar which usually puts downward pressure on oil prices.

With investors still focused on equity markets, gold was ignored again finishing just a tad lower at $1252.8. At least this side of the Atlantic, participants looked for a reason to move back into the precious metal but remained slightly unimpressed by the easing attempts so far.