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Reports UK

UK stock market commentary (May 19, 2014): Calm; but no storm

May 19, 2014, Monday, 06:11 GMT | 01:11 EST | 09:41 IST | 12:11 SGT
Contributed by Capital Spreads

European equities are set to open flat as traders adopt a wait and see attitude. After posting new highs last week, the bulls took a breather and we’ve drifted back from those levels but it doesn’t look like panic is setting in and they’re taking it in their stride. As evidenced by the lack of volatility, there aren’t any clear catalysts for traders to get their teeth into and back up their convictions with big trades. Until something happens to prick trader’s state of apathy, expect markets to continue drifting.

The Dow Jones managed to stop the rot on Friday in what was beginning to look like a serious correction. The index closed up 44 points following a late surge to close at 16,491. Markets made the move as news of Warren Buffett’s added investment in Verizon was warmly received by risk assets. Although nothing is a given in markets, today is expected to be quiet as data releases couldn’t be much thinner.

The Euro was pretty much unchanged against the dollar for the third day on the trot. The pair closed down 10 pips at 1.3698. Traders will look forward to Wednesday evening when the minutes from April FOMC meeting will hopefully give some more clues as the future of US monetary policy.

The price of oil is going to be increasingly driven by the goings on in Libya this week where violence has flared up again. Fears are that supply will be interrupted have already had a positive effect on WTI price in early trading this morning. This is a good start after a strong previous week. Futures for July delivery closed up 50 cents at 101.57.

Gold still feels very attached to the $1,300 mark, now trading around $1,295. A decent move up or down seems hard to come by. Unsurprisingly enough, following two days of moves lower on Thursday and Friday, the market is ticking up in early trade this morning. News of hedge funds cutting bullish bets should give reason to tread cautiously.