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Reports UK

UK stock market commentary (May 26, 2014): Famous Victory for Farage

May 26, 2014, Monday, 05:38 GMT | 00:38 EST | 09:08 IST | 11:38 SGT
Contributed by Capital Spreads

The increasing hold that UKIP is administering upon British politics is what Nigel Farage claims to be the ‘most extraordinary result in British politics for 100 years.’ The full market reaction to the European elections will have to wait until Tuesday as UK equities are shut for the bank holiday. The UK, holding holiday hands with the US which is observing Memorial Day, means we are expecting a very light session indeed.

However, investors will be able to enjoy the extra day feeling re-assured that the global equity picture remains optimistic. Record highs in the US on Friday transpired into gains in Asia overnight, which should translate into gains for UK equities when they re-open tomorrow, barring a fresh piece of global news is the meantime.

Optimism on the US economy continued to push the equities higher on Friday with the Dow Jones closing 59 points higher at 16,607. The US data surprised to the upside lately which offered support and discarded the disappointing growth figures on this side of the Atlantic. Today, the Memorial Day holiday is expected to bring reduce volumes so spikes either way are a distinct possibility.

Ahead of elections for the European Parliament, the shared currency posted another selloff, losing 28 pips versus the greenback to finish the week at 1.3629. The euro sceptic parties are seen making significant gains compared with the previous elections which put the common currency on the back foot.

Following a drop in the US crude oil inventories, the WTI pushed even higher reaching a 5 week high at $104.31, a 59 cents increase for the session. In addition, geopolitics played its part in supporting oil prices as presidential elections were scheduled in Ukraine over the weekend coupled with ongoing concerns about Libya.

Gold remained below $1300.00 mark as improvements on the economy enticed investors to head into equities and out of the safety of the precious metal. Furthermore, the yellow metal lost $1.4 to $1282.9, showing no sign of coming back into the spotlight.