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Reports UK

UK stock market commentary (June 24, 2014)

June 24, 2014, Tuesday, 06:11 GMT | 01:11 EST | 09:41 IST | 12:11 SGT
Contributed by Capital Spreads

European equities are set to open flat following lacklustre sessions in the US. May be it’s the summer weather that’s keeping traders in the pub for long lunches that’s responsible for the continual decline of volatility, volume and interest in the markets at the moment. What is interesting is that the global macro environment is far from void of catalysts, what with the threat of Iraq and the Ukraine possibly leading to prolonged higher oil prices stalking the global economy alone, you’d think we would be seeing slightly more jitters. However, with the bulls showing uncanny complacency and an ability to shrug of bad news, I’m sure I’ll be writing about new all time highs at some point again before the month is out.

We saw a sharp rally in early trading yesterday following positive Chinese economic data which took the Dow Jones to a record intraday high of 16,992. However, amid a rise in sales of existing homes in the US, their prices increased at the weakest pace in 2 years. So investors squared some of the positions assessing the latest bout of corporate mergers. They were also probably aware that as the Dow reaches new highs a potential selloff could happen any time.

Further economic slowdown in France amid weakening manufacturing in euro zone triggered fresh concerns about the region’s fragile recovery. Normally that would send the shared currency south but the greenback was already hit by the Fed last week’s comments. As a result the EUR/USD pair finished rather flat around 1.36.

After opening steeply higher at $107.43, the US crude posted a steady drop throughout yesterday’s session, ending $1.40 down at $106.03. It appears that Iraq’s army recaptured lost ground from militants putting the energy markets at a temporary ease. Additionally, the US Secretary of State John Kerry gave extra reassurances at its meeting with Iraq’s Prime Minister Nouri al Maliki.

Gold market participants remained in the bullish mode after the Fed’s meeting and continued to push the precious metal higher, $3.00 up for the day to $1318.2. And with geopolitical tensions in places like Ukraine, Syria and Iraq unlikely to end soon, demand for a safe haven asset could stay well supported for a considerable period of time.