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25/06/2014: Trading outlook ahead of the US session

Financial markets have had a relatively quiet morning during the European trading session. The initial weakness seen in the European equity indices has been pared to a certain extent, with a rebound for DAX. Perhaps the most striking element to this has been that the FTSE 100 has failed to rally with it. For the past 6 weeks, UK equities have been underperforming the DAX, and this trend is showing little sign of reversing any time soon.

Approaching US trading, the S&P 500 futures suggest the index is set to open between 1 & 2 points higher as the selling pressure seen late in the session from yesterday shows signs of stabilizing. The final reading of US Q1 GDP is going to be interesting with expectations of a downward revision to -1.8% expected, although the backward looking nature of this data is unlikely to cause too much selling pressure and the Durable Goods Orders (also at 13:30BST and expected to be 0.0%) could easily be the bigger story.

The initial weakness Forex trading has lacked direction all morning, with only two moves of any real note. Sterling remains under pressure following on from yesterday’s dovish outlook from Mark Carney, While the New Zealand dollar gaining support to push back towards 0.8700 as it undoes some of yesterday’s weakness. Euro/Dollar continues to trade around $1.3600, as it has done for the past few days.

In the commodities, gold has barely moved all morning as the consolidation of the past few days continues. Physical gold buying has just dried up slightly as the market has to cope with the higher prices driven by last week’s spike. The support at $1306.50 is the key near term floor. The oil price (Brent Crude) has just started to correct slightly after the Iraqi oil minister noted that oil production is set to increase. This is now pulling the price of Brent Crude lower, back towards the support band $112/$113.

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