UK pound tumbled, Asian stocks and U.S. futures gain while yen and gold decline 

• May’s Conservative party forecast to win without majority

• Asian stocks, U.S. futures gain while yen and gold decline

It wasn’t a day to rival the Brexit vote. While the pound tumbled as the U.K. faces a hung parliament and an unclear course in its approach to exit the European Union, other assets shook off the election results.

Sterling dropped the most since January as the ruling Conservative Party was on course to win most seats though possibly falling short of an overall majority. The impact was far more muted elsewhere, as volatility measures retreated. S&P 500 Index futures advanced along with equities from South Korea to Singapore. Gold dropped for a third day, while Treasuries were little changed.

“Even though we’re seeing higher sterling volatility, there’s even less prospect of that spilling into broader markets,” Ray Attrill, head of foreign exchange strategy at National Australia Bank Ltd. in Sydney, told Bloomberg TV. “This is still a little local difficulty rather than an event of global proportions.”

Investors fret about another spasm of political turmoil less than a year after Britain voted to leave the European Union. Theresa May’s future as prime minister was thrown into doubt after her gamble to call an early election backfired just 10 days before Brexit negotiations are due to start.

“We’ve had some pretty benign reaction so far,” John Woods, chief investment officer for the Asia Pacific at Credit Suisse Group AG, told Bloomberg TV. “A hard Brexit now is yesterday’s story.”

The election results cap a day of major events that riveted investors all week. But just as traders shrugged off the U.K. vote, they also weren’t fazed by the European Central Bank’s policy decision or testimony from former FBI Director James Comey.

ECB President Mario Draghi said the euro region still isn’t generating enough inflation, overshadowing improved prospects for the economy that led officials to upgrade their growth assessment. In Washington, Comey and Donald Trump accused each other of lying about their private encounters in the wake of dramatic Senate testimony that centered on whether the president sought to quash part of a federal probe into Russian meddling in the 2016 election.

Here are the main moves in markets:

Currencies

• The pound lost 1.5 percent to $1.2760 as of 2:01 p.m. in Tokyo, after falling as much as 2 percent earlier.
• The yen retreated 0.2 percent to 110.21 per dollar.
• The euro was little changed at $1.1210.
• The Bloomberg Dollar Spot Index added 0.2 percent, gaining for a third day.

Stocks

• Futures on the S&P 500 rose 0.1 percent. The underlying gauge rose less than one point on Thursday, for a second day of gains. It briefly rose above its closing record during Comey’s testimony but faded in afternoon trading.
• Futures on the FTSE 100 Index increased 0.2 percent. The Stoxx Europe 600 Index edged lower on Thursday.
• Japan’s Topix index was little changed while the Nikkei 225 Stock Average jumped 0.4 percent. SoftBank Group Corp. rallied 6.2 percent to the highest in 17 years after agreeing to buy Boston Dynamics from Google parent Alphabet Inc.
• Australia’s S&P/ASX 200 Index rose 0.2 percent. South Korea’s Kospi index climbed 0.7 percent and Singapore’s Straits Times Index added 0.4 percent.
• Hong Kong’s Hang Seng fell 0.3 percent and the Shanghai Composite added less than 0.1 percent. Data showed China’s producer price gains moderated following further easing in commodity prices.

Bonds

• The yield on 10-year Treasuries was little changed at 2.19 percent.
• Benchmark U.K. gilt yields rose three basis points to 1.03 percent on Thursday, underperforming European peers. German bund yields fell one basis point to 0.25 percent.

Commodities

• Oil lost 0.2 percent to $45.64 a barrel, after touching the lowest level in five weeks as an unexpected increase in U.S. crude stockpiles cast doubt on OPEC’s ability to rebalance world crude markets.
• Gold fell 0.2 percent to $1,275.10 an ounce, sending it toward a three-day decline of 1.5 percent.

Source: Bloomberg – U.K. Vote Roils Pound While Other Assets Tranquil: Markets Wrap

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