{"id":31898,"date":"2017-06-09T05:32:04","date_gmt":"2017-06-09T05:32:04","guid":{"rendered":"http:\/\/www.biphoo.com\/bipnews\/?p=31898"},"modified":"2017-06-09T05:32:04","modified_gmt":"2017-06-09T05:32:04","slug":"sterling-shaken-uk-election-shock-fallout-limited-elsewhere","status":"publish","type":"post","link":"https:\/\/www.biphoo.com\/bipnews\/business\/sterling-shaken-uk-election-shock-fallout-limited-elsewhere.html","title":{"rendered":"Sterling shaken by UK election shock, fallout limited elsewhere"},"content":{"rendered":"

\n\tSterling shaken by UK election shock, fallout limited elsewhere<\/span><\/span><\/strong><\/span>
\n<\/h2>\n

\n\tSterling sagged in Asia on Friday as British elections left no single party with a clear claim to power, sideswiping investors who had already weathered major risk events in the United States and Europe.<\/span><\/span><\/span>\n<\/p>\n

\n\tWith the majority of seats counted in the snap vote, British Prime Minister Theresa May had no way to win an outright majority in parliament.<\/span><\/span><\/span>\n<\/p>\n

\n\tThe shock outcome saw the pound shed as much as three U.S. cents at one point, or close to 2 percent, on fears the political turmoil could delay, and complicate, Brexit talks, which are due to start in 10 days.<\/span><\/span><\/span>\n<\/p>\n

\n\tYields on 10-year gilts GB10YT=TWEB fell 3 basis points to 1.00 percent, but FTSE futures FFIc1 recouped early losses and turned 0.3 percent higher, perhaps on hopes that a weaker pound would help the economy.<\/span><\/span><\/span>\n<\/p>\n

\n\tThe damage was limited elsewhere, with E-mini futures for the S&P 500 ESc1 edging up 0.1 percent.<\/span><\/span><\/span>\n<\/p>\n

\n\tJapan's Nikkei .N225 added 0.4 percent and MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS inched up 0.2 percent.<\/span><\/span><\/span>\n<\/p>\n

\n\t"This is messy for the UK economy and its Brexit negotiations and hence is a negative for the pound and share market," said Shane Oliver, chief economist at AMP.<\/span><\/span><\/span>\n<\/p>\n

\n\t"But the UK is just 2.5 percent of world GDP and it's hard to see significant implications for global investment markets."<\/span><\/span><\/span>\n<\/p>\n

\n\tThe rot started when an exit poll showed the ruling Conservatives could fail to win a clear majority when markets had expected a handy victory.<\/span><\/span><\/span>\n<\/p>\n

\n\tThe BBC forecast the Conservatives would hold a reduced 318 seats in the 650-member parliament, following a big swing to the left-leaning opposition Labour Party. For the latest updates, click.<\/span><\/span><\/span>\n<\/p>\n

\n\tBetting agencies were already taking wagers on whether May would still have her job by the end of the day.<\/span><\/span><\/span>\n<\/p>\n

\n\t"We could be heading for a period of market uncertainty, which will be compounded by the elephant in the room this time around — the forthcoming Brexit negotiations," said Michael Judge, head of corporate dealing at broker OFX.<\/span><\/span><\/span>\n<\/p>\n

\n\t"Investment decisions are likely to be put on hold for the short to medium term — certainly until we have clarity on who governs the UK. At that moment, that is anybody’s guess."<\/span><\/span><\/span>\n<\/p>\n

\n\tBy 0515 GMT, sterling had shed 1.6 percent to $1.2752 GBP=, having earlier carved out a two-month trough of $1.2693. It was also down 1.4 percent on the euro at 87.80 pence EURGBP=.<\/span><\/span><\/span>\n<\/p>\n

\n\tThe Japanese yen gave up early gains and eased to 110.20 per dollar JPY=. The euro was little moved against the U.S. dollar at $1.1204 EUR=.<\/span><\/span><\/span>\n<\/p>\n

\n\tThe single currency had slipped overnight when the European Central Bank cut forecasts for inflation and said it had not discussed scaling back its massive bond-buying campaign, sending bond yields to multi-month lows.<\/span><\/span><\/span>\n<\/p>\n

\n\tNO SMOKING GUN<\/span><\/span><\/span>\n<\/p>\n

\n\tOvernight, Wall Street had seemingly judged the testimony of former FBI director James Comey was not life-threatening to the administration of President Donald Trump.<\/span><\/span><\/span>\n<\/p>\n

\n\tComey accused Trump of firing him to try to undermine the investigation into possible collusion by his campaign team with Russia's alleged efforts to influence the 2016 election.<\/span><\/span><\/span>\n<\/p>\n

\n\t"I think the market is taking less of an alarmist review of this situation because there is no smoking gun here," said Jefferies & Co money market economist Thomas Simons.<\/span><\/span><\/span>\n<\/p>\n

\n\t"So it's not particularly impactful for thinking about… Trump's economic agenda to go through."<\/span><\/span><\/span>\n<\/p>\n

\n\tThe Dow .DJI rose 0.04 percent, while the S&P 500 .SPX gained 0.03 percent and the Nasdaq Composite .IXIC 0.39 percent.<\/span><\/span><\/span>\n<\/p>\n

\n\tIn commodity markets, spot gold XAU= was 0.3 percent lower at $1,274.80 an ounce.<\/span><\/span><\/span>\n<\/p>\n

\n\tOil prices remained subdued with Brent having settled at its lowest since Nov. 29, the eve of an OPEC production cut deal.<\/span><\/span><\/span>\n<\/p>\n

\n\tU.S. crude futures CLc1 edged down a cent to $45.63 a barrel, with Brent crude LCOc1 flat at $47.86.<\/span><\/span><\/span>\n<\/p>\n

\n\tSource:- http:\/\/www.reuters.com\/article\/us-global-markets-idUSKBN18Z33A<\/span><\/span><\/span><\/p>\n

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