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Reports UK

UK stock market commentary (May 20, 2014): Another boring morning

May 20, 2014, Tuesday, 06:55 GMT | 02:55 EST | 11:25 IST | 13:55 SGT
Contributed by Capital Spreads

Despite overnight gains in the US and Asia, European indices aren’t able to latch on to any of their bullishness and we expect a mixed start. While the overall global economic picture isn’t too clear itself, for Europe there is the added cloud of uncertainty from this week’s European elections where euroskeptic parties across the region are expected to do well. It’s been quite a while since the euro zone crisis had its last flare up but with polls suggesting that 25%-30% of the seats will go to anti establishment parties, traders maybe concerned that next week’s results could stir up old memories.

Tech stocks led the world’s main indices higher on Monday as corporate news drove markets in a day lacking of US economic data. Investors reacted to the ‘falling through’ of the Pfizer Astrazeneca deal and AT&T’s plans to buy DirecTV. Market sentiment also took caution from China, where tightening credit is worrying investors about future growth opportunity. The Dow Jones rose 20 points to close at 16,512.

It was another very quiet day for the Euro against the Dollar. This was not a surprise given the lack of market moving news for traders to dig their teeth into. Their was some brief excitement in the middle of the session when ECB member Yves Mersch re-iterated the central bank’s intention to loosen monetary policy at next month’s meeting. The pair rose 10 pips to close at 1.3708.

Amid speculation that crude supplies will fall further at the biggest storage hub in the US, West Texas intermediate continued on its run on Monday. US crude is now trading near its four week high. Futures for June delivery which expires today closed up 58 cents at 102.15.

It was a reasonably volatile day for gold and although the session ended back down where we started, there was plenty of opportunity throughout the day. On a day short of data, gold created an almost exactly inverse graph to stocks to give the text books an almost perfect risk on/off case study. Spot gold closed up $2 at $1,293.