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Reports UK

UK stock market commentary (June 27, 2014)

June 27, 2014, Friday, 06:35 GMT | 01:35 EST | 10:05 IST | 12:35 SGT
Contributed by Capital Spreads

Flat to marginally higher starts are expected for the European indices as traders shrug off negative cues. The biggest drag on markets yesterday were the hawkish comments from the Feds Bulllard, but whatever initial panic reaction it caused earlier in the day, those losses had largely or even completely been pared back. Whether markets are just taking his views as an outlier view or are pricing in the inevitable trotting out of one of the more dovish Fed members, possibly Williams on Monday, they don’t seem to be too troubled or even believe that a hike is coming any time soon.

The shared currency dropped 18 pips against the greenback to close at 1.3611 as investors are still weighing the effects of the ECB lowering the benchmark rate to a record 0.15%. Although the rhetoric will likely remained balanced / conflicting on both sides of the Atlantic, the fact of the matter is that economic data indicates the US economy is ahead on the road to recovery versus its European counterpart.

Ongoing signs that crude output in Iraq was not affected by the sectarian violence spreading spilled over into the oil complex yesterday. Furthermore, there were reports indicating that exports will in fact increase next month. So, amid rising crude stockpiles in the US the WTI prices tumbled sharply yesterday finishing $1.09 down at $105.62 a barrel.

Every time a Fed official comments on interest rates rising sooner than expected gold seems to be hurt. It was the case again yesterday with demand for non interest paying precious metal suffering as a consequence pushing its price $1 down to $1317.5.