New York: 12:11 || London: 17:11 || Mumbai: 20:41 || Singapore: 23:11

Reports UK

UK stock market commentary (May 16, 2014): Bears coming out of the woodwork

May 16, 2014, Friday, 05:25 GMT | 00:25 EST | 08:55 IST | 11:25 SGT
Contributed by Capital Spreads

European equities are set to open flat as traders remain nervous following recent falls. Whilst pundits are putting the selloff down to the weak European GDP figures, the trite reasoning is a bit of a stretch to explain the declines in the US and Asia. Instead, the European data was more an excuse for already pent up selling pressure that had built up as we reached key technical levels. There doesn’t appear to be much appetite for bargain hunting on the open so traders need to be wary of the bears gaining momentum going into the weekend.

The Dow Jones dropped nearly 200 points yesterday. The second day of fairly serious selling will start to concern investors. Will it be seen as a good point to buy down here or will the markets set into panic mode? Disappointing earnings from Walmart and mixed data are being held responsible for the fall, although it seems a long way to drop on such evidence. The market was highly inflated beforehand so it is more than likely that some profit taking took place too. The DJIA closed down 167 points at 16447.

Initially European data hurt the Euro in the morning before the US followed suit in the afternoon. Thus, the currency pair was almost entirely unchanged for the session. First, European GDP figures came in below expectations (save the Germans) to further put pressure on the ECB. Then mixed data from across the pond put further pressure on the dollar.

West Texas Intermediate fell for the first time in four trading sessions. Among contrasting news earlier in the week, the oil market is very well supplied apparently with reserves at 398.5 million barrels. Oil will also have received downward pressure in the sell off in equities. US crude closed down 87 cents at $101.50.

Stronger initial jobless claims caused the main move in the day for the precious metal. Fewer claim applicants for the prior week hurt the metal by removing the metals safe haven appeal. Poorer data later on failed to reverse the trend. Spot gold closed down $9 at $1,996.