Good morning and happy Friday.
To the scoreboard:
Dow: 21,183 +9 (+0.04%)
S&P 500: 2,434 +1 (+0.03%)
AUD/USD: 0.7536 -0.0014 (-0.17%)
ASX200 SPI futures (June contracts): 5,680 (+5)
Iron ore benchmark 62% fines: $US55.36/t -$US0.07 (-0.13%)
1. UK election shock?: Markets are reacting to a surprise result in the UK election. Theresa May’s Conservative Party was a heavy favourite coming in, but exit polls show a provisional seat count of 314/266 against Jeremy Corbyn’s Labour, which points to a hung parliament. Business Insider has live coverage here as the votes come in this morning. The pound immediately fell by 0.6% against the greenback and crashed by 1.6% against the euro.
2. No other big surprises: Former FBI director James Comey was combative in his testimony to Congress, but there was no further information in addition to his written testimony that would set the wheels in motion for an impeachment charge for President Trump. US markets were little changed on the news. In the wake of the UK election, US bonds are slightly down and the USD is finding demand as the uncertainty spurs a move to safer trades.
3. And Draghi keeps a lid on it: European Central Bank president Mario Draghi said that economic risks were more balanced, but the 3-year inflation outlook was downgraded slightly to 1.9%, 1.8% and 1.7% through 2019. That’s below the 2% target rate, and Draghi said that the current levels of monetary stimulus (low interest rates and bond purchases) were still required to help boost growth. The ECB was pretty clear in its communications leading up to the meeting, and the euro fell slightly but markets were little changed.
4. Australia today: The ASX200 fought back yesterday after falling again at the open. It was a plucky effort and suggests that stocks may be finding a floor after recent heavy selling. Futures are pointing slightly higher this morning but there may be headwinds from the UK election as results are finalised this morning. The Aussie dollar surged against the pound this morning following the exit polls, but has lost ground against most other G10 currencies.
5. Doom and gloom still on the agenda: Another famous hedge fund manager has joined the ranks of investors saying that stocks look overvalued and a market crash in the next few years is increasingly likely. Jim Rogers criticised the US Federal Reserve and its ultra-accommodative monetary policy. He said he’s invested in China, Russia and Japan as those markets were more depressed whereas the US is an an all-time high. Watch the interview here.
6. More pain for Snap: Traders are again starting to load up on short positions betting against Snap Inc (the parent company of Snapchat). The ratio of put/call options (short bets against long bets) is at its highest since March when the company faced short-selling pressure immediately after listing. The central concern about the pace of Snap’s user growth remains, with growth slowing while downloads for Instagram increase. The stock closed down 3.6% today at $US18.85.
I’m Sam Jacobs and you can catch me on Twitter @Mr_SamJacobs.