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Reports UK

UK stock market commentary (May 12, 2014): Markets marking time

May 12, 2014, Monday, 05:33 GMT | 00:33 EST | 09:03 IST | 11:33 SGT
Contributed by Capital Spreads

European indices are set to open higher, except for the CAC which has several companies going ex-div shaving 23.7 points off the starting price. Despite mounting fears in the Ukraine, momentum seems fairly evenly balanced with both the bulls and bears still waiting for some clear catalyst. The range bound nature of markets in 2014 has seen many false peaks before, only to fall away shortly after and although we’ve seen some modest gains over the last few weeks it looks as though we could be heading into some resistance for the major indices. With a very light economic calendar today and the Ukraine vote keeping money on the sidelines, Monday could be a day for traders to mark time.

As the earnings season starts to wind down, US equities will look back on the last few weeks favourably. The Dow Jones managed to close at an all time high on Friday at 16583, up 32 points. It was a topsy-turvy day of trading but in the end the bulls emerged victorious. Although the markets are high, clear direction is difficult to come by and the moment.

The Euro continued to ease following Mario Draghi’s comments on Thursday. Investors have been selling the Euro ever since and has fallen 230 pips to close the week at 1.3750. The ECB will be much happier now and their comments seem to have had the desired effect. However, this is a bit of a catch 22 for traders because at the end of the day, part of the aim of the ECB is to de-value their shared currency. Much more movement and they may deem a rate cut unnecessary.

As per normal, the energy market is being heavily influenced by geopolitical tensions. Markets are trading slightly higher on fresh news that a referendum held in the East of Ukraine to join Russia appeared victorious. Previously, oil had weakened on dollar strength. The June contract settled down 27 cents at $99.99 on Friday.

Gold has been hovering within $20 of the $1,300 mark for two months now. As of late the trend has been downward based on the new weakness of the Euro and a receding safe haven demand although in early trade on Monday morning some support has been found. The precious metal closed the week at $1,289.

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