Markets react nervously as uncertainty looms in the US and Europe

By Trevor Hoey. Published at Jun 8, 2017, in Features

On the eve of the UK election and the release of important commentary on monetary policy by the European Central Bank (ECB), confidence in most global markets tended to weaken.

However, US markets still managed to finish in the black despite the fact potentially damaging testimony by former FBI Director James Comey could provide political instability.

The other factor in the mix was oil prices, but the sharp overnight fall appeared to impact European markets more so than the US.

Strong performances from some index heavyweights in the financial sector also helped to offset weakness in other sectors. Gains of more than 1% were delivered by American Express and JP Morgan Chase, and there was also solid support for Goldman Sachs Group.

After starting strongly and then drifting into negative territory midway through the session, the Dow rallied strongly late in the day to close up 0.2% at 21,173 points.

The NASDAQ traded in similar fashion, but its late surge saw it pass the 6300 point mark before closing at 6297 points, not far shy of its all-time high of 6310 points.

Despite the fact that polls indicate Theresa May is in good shape to be re-elected as Prime Minister, the UK market reacted nervously with the FTSE 100 falling 0.6% to close at 7478 points.

There was little movement in mainland European markets with the DAX coming off 0.1% to close at 12,672 points and the Paris CAC 40 relatively flat at 5265 points.

On the commodities front, oil was under the spotlight as it plunged 5% to US$45.78 per barrel, which now sees it threatening to break below the August 2016 lows of circa US$45 per barrel.

Gold’s traditional safe haven appeal wasn’t enough to keep it in positive territory as it came off 0.6% to close at US$1289 per ounce.

The iron ore price fell approximately 1% to close at US$55.43 per tonne.

Copper was the only base metal to gain ground, increasing marginally to US$2.53 per pound.

Nickel resumed its downward trend, falling circa 0.7% to US$3.96 per pound.

Zinc may have started to stabilise after recording steep declines over the last seven trading sessions, falling only marginally overnight to US$1.10 per pound.

Lead was relatively flat, closing at US$0.92 per pound.

The Australian dollar continued to strengthen, and it is sitting in the vicinity of US$0.755.

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