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Reports UK

UK stock market commentary (May 14, 2014): Markets at an inflection point

May 14, 2014, Wednesday, 05:25 GMT | 00:25 EST | 08:55 IST | 11:25 SGT
Contributed by Capital Spreads

Despite the major European indices just nudging new annual highs yesterday, trepidation about whether we can justify theses levels sees the expectations for this morning’s opening to be fairly flat. Whilst the markets have demonstrated a remarkable ability to shrug off the crisis in the Ukraine and interpret weak China data as a positive, there is a sense of foreboding about this up move. Will this be a repeat of the other suckers rallies we’ve seen this year whereby there’s been just enough bullishness to draw people in just before we sell off? At the moment it feels as though there’s a wall of money waiting for a ‘clear’ sign of which way markets are going to go at this inflection point and when we do get that signal expect a stampede.

The winning streak continues for the Dow, however yesterday’s rise was only moderate. The blue chip index traded a very tight range which is encouraging up at these levels - no one seems to be panicking yet. The US retail sales were disappointing but this seems to have done little to hurt sentiment, optimism remains. The Dow Jones closed at its third straight all time high, up 20 points at 16,715.

The Euro had a tough day following the influential Zew surveys. The investor confidence measure fell for the fifth straight month and a sixteen month low. This disappointment, coupled with reports that Germany’s central bank would encourage further stimulus from the ECB in June’s meeting. The Eurodollar fell 55 pips to 1.3703.

West Texas intermediate oil advanced for the third straight day on Tuesday following a report which that showed supplies shrank at the US’s largest storage hub. There was little geopolitical news to affect the price. US crude gained $1.11 to settle at 101.70.