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Reports UK

UK stock market commentary (May 01, 2014): Record Highs

May 1, 2014, Thursday, 08:49 GMT | 03:49 EST | 12:19 IST | 14:49 SGT
Contributed by Capital Spreads

European equities look to set to open marginally higher this morning as further good economic data have pushed markets higher and more importantly there were no surprises from the FOMC meeting yesterday evening. The US looks to have shrugged off its winter cold and has set its sights on the sun and new pastures, consequently record highs. So, can we don our swim shorts and expect plain sailing for the foreseeable future? Not quite. Economic releases including Personal Income and Spending, Non-Farm payroll and Manufacturing data will give further insight into the strength of the Economy and determine whether the bulls can run easy. This, coupled with UK consumer confidence at it’s highest since mid 2007, portrays a very rosy outlook, for now.


The Federal Open Market Committee said in a statement the US economy is gaining momentum thus discarding concerns regarding weakness seen in earlier months. It also reiterated its pledge to trim the pace of assets purchases whilst maintaining the benchmark interest rate at near zero for ‘a considerable time’. Thus the Dow Jones rallied 57 points to 16,584.


A pick up in the euro zone inflation gave the ECB a bit more room to manoeuvre, damping bets of an imminent monetary stimulus. On the other hand, an encouraging statement by the Fed hurt the greenback which lost 56 pips against the euro to close at 1.3867. And there’s expectation the nonfarm payrolls report will show an increase of 215,000 jobs.


The US Department of Energy indicated in its weekly crude inventories report a 1.7 million barrels rise to a record high of 399.4 million barrels. That is the most since records begun in 1982 and pushed the WTI crude prices $1.06 down to $99.70 despite a lower greenback which usually acts as good support.


The Federal Reserve’s optimistic tone about the economic outlook hit the precious metals yesterday as investors shifted their cash into higher yielding assets. Although gold price is up for the year due to conflict in Ukraine and some early stuttering in the US, yesterday it dropped $4.3 to end at $1291.4.