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Reports UK

UK stock market commentary (May 28, 2014): Join the club

May 28, 2014, Wednesday, 06:20 GMT | 02:20 EST | 10:50 IST | 13:20 SGT
Contributed by Capital Spreads

European equities look set to open fairly flat as investors take stock following another impressive day of gains. Following the bank holiday markets took heed from a positive global outlook and a ‘concern-free’ day of trading. The bears are lacking the headline breaking alarm bells to trigger a sell-off, and until that time markets will most likely drift higher as volatility (and therefore risk) decreases.

The Dax will be looking to join the Dow Jones and Nikkei in the exclusive ‘five figure’ club today. The top 30 German stocks are only 50 points away from a major level and currently sit double the number from 32 months ago – what a turn around. On a separate issue, UK mortgage approvals fell for the third month on the trot on Tuesday as the housing market looks as though it’s just at the point of running out of steam.

A surprise rise for the durable goods orders figures sparked a fresh rally pushing the Dow Jones 28 points higher to 16,682. In a separate report the US consumer confidence increased to 83 from 81.7 last month. Additionally, the S&P Case Schiller index of property prices also indicated double digits growth. So, continued strong economic data may help the Dow to test the recent record high of 16,699.

Considering the success of euro skeptic parties in the weekend’s European Parliament elections the shared currency proved rather resilient so far.  The EUR/USD pair dropped just 10 pips to 1.3635 yesterday as investors are still digesting the scale of a possible ECB intervention to stop the risk of deflation.

Expectations for large crude oil supplies have sent WTI prices 10 cents lower yesterday to close at $104.17 a barrel. The rally in equities seen lately is attracting the bulk of investors’ interest so commodities are under pressure at the moment. The weekly inventories numbers will be released tomorrow due to the Memorial Day holiday.

As S&P rose to a new record following better than expected US economic data, gold prices plunged to a 15 week low. It lost a significant $29.2 to $1263.6 with its short and medium term trends resuming their southward trajectory.