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Reports UK

UK stock market commentary (May 30, 2014): World at ease

May 30, 2014, Friday, 06:21 GMT | 01:21 EST | 09:51 IST | 12:21 SGT
Contributed by Capital Spreads

European equities look set to open flat again and then ‘presumably’ extend their advantage once more. The lofty equity prices must be put down to the World being at such ease at the moment. Economies are pootling along nicely, as are companies; and Janet Yellen seems to have gone on an extended holiday. The political strife 1500 miles east of here is still serious, but is being rather overlooked by investors.  The majority of traders are short at the moment, and who can blame them. However, the Genie is unlikely to grant a wish until something unsettling casts itself upon us, and that doesn’t look like coming today.

Economic news is very weak on the ground at the moment, although the Norwegian Manufacturing Wage Index is due to report at 9am, so at least there is ‘some’ excitement for you all over the morning cuppa…….!

Despite a bigger than expected contraction for the US economy in the first quarter, 1% against forecast for 0.5% drop, the Dow Jones posted a 43 ticks rally to finish at 16,692. It seems investors remained optimistic as the overall picture indicates improvement and were ready to overlook a one off accident as long as retail sales, manufacturing and employment keep getting stronger.

On this side of the Atlantic news the US economy was shrinking for the first time in 3 years was good enough reason to sell the greenback. Instead, currency market participants went into the shared currency pushing the EUR/USD pair higher. Nonetheless, a pullback in the afternoon session reduced the daily gains to just 10 pips to 1.3601.

Tumbling supplies at Cushing, Oklahoma, the delivery point for US crude oil have pushed the WTI prices 45 cents higher yesterday to $103.51 a barrel. A weaker greenback undoubtedly helped but investors’ confidence in the US economy indicated by the rally in equities was also encouraging for the energy complex.

And again please...... it appears there’s no end in sight to that violent sell off from Tuesday as gold prices lost another $3.3 to $1255.2. It did not matter too much the dollar was mostly on the back foot, equities is where most of the interest is going at the moment.