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Reports UK

UK stock market commentary (May 23, 2014): Election trepidation

May 23, 2014, Friday, 06:00 GMT | 01:00 EST | 09:30 IST | 12:00 SGT
Contributed by Capital Spreads

European equities are set to open mixed as traders turn cautious ahead of election results. Despite modest gains in overnight markets, European traders are showing some hesitation ahead of the Ukrainian and European election results and are expected to play it safe going into the weekend. With the intensifying violence in the Ukraine, fears are that a presidential election will merely polarise the two sides and could be a trigger for an escalation of fighting. Since the last European elections in 2009, we’ve had numerous bailouts, austerity, stubborn unemployment and crisis after crisis. With the voting already underway, concerns are brewing that the corridors of power in Brussels could be full of euro sceptic anti establishment parliamentarians come Monday.

Yesterday was a relatively flat day for equities although the majority of world indices managed to make small gains. Initially the Initial Jobless claims in the US came out 14,000 jobseekers worse than expected. The market spiked down but losses were reversed quickly and then strong manufacturing and existing home sales data helped seal the win for the bulls. The Dow gained 10 points to close at 16,543.

Finally the Euro is starting to make a bit of a move against the Dollar. Having ended up around the 1.37 mark for over a week, the ECB members are finally starting to get their wish – a weaker euro. Rather than weak data from the Eurozone, strong data from across the pond was the rationale behind the fall. The Euro closed down 32 pips at 1.3655.

The run is over for US crude oil. After hitting a one month high the day previously, investors saw the market priced a bit high for their liking. There was not a reason in particular to quantify the drop; data has been fairly mixed, if not good. A longer term highs and lows markets will always be a bit more jumpy. The contract for July delivery slipped down 33 cents to $103.74

Gold endured a big spike on the back on poor initial jobless claims more than 10 dollars higher before succumbing to better Manufacturing and Housing data. Despite the high volatility (relative to the past few sessions) the precious metal still finds rest at the $1,300 level. Spot gold closed up $1 at $1,294.