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UK stock market commentary (May 27, 2014): Get Back to Work

May 27, 2014, Tuesday, 06:38 GMT | 01:38 EST | 11:08 IST | 13:38 SGT
Contributed by Capital Spreads

Normal service will resume this morning as banks re-open their doors following the long weekend. We have got to the end of May with little talk or reaction to the old adage, ‘sell in May, and go away.’ It is normally a seemingly nonsensical point of reference for struggling market commentators, but if you look at last year’s FTSE price at this time last year, and compare it to a month later, you will notice a difference of more than 800 points. Should we give the old proverb a little more respect? Of course, there was a lot more economic uncertainty then, and the onset of the tapering debacle provided the fuel for the largest correction to the UK’s blue chip index since 2008. Investors will also take confidence from the Volitility Index (VIX) which is at a 14 month low. From a simpler standpoint, markets have not provided the excitement they are capable of recently, surely something is bound to catch investors unawares soon?

By and large the Memorial Day holiday kept investors on the sidelines amid a shortened session for the US indices. However, encouraged by the recent strong economic data participants stayed in buying mode pushing the Dow Jones another 29 ticks higher at 16,654.

The recent weakness in the euro was preceded by expectations that European Central Bank President Mario Draghi signalled his readiness to ease the monetary policy in June. However, yesterday the shared currency posted a slight rebound against the greenback gaining 21 pips to close at 1.3645.

Ahead of consumer confidence data in the US poised to indicate a rebound in May, crude prices remained elevated. Expecting strong oil demand, investors did not rush to take profits so the WTI prices moved just 15 cents down to $104.19.

Social unrest in Ukraine did not escalate as some analysts might have predicted following Presidential elections over the weekend. So gold prices held below the psychologically important $1300.00 mark ending a very quiet session $1.3 lower at $1293.00.