The British pound was the stand-out amid muted moves in many markets, weakening on the prospect of a hung parliament in next week’s UK election and handing a boost to stocks. Crude fell a second day before the release of supply data.
Sterling dropped for the first time this week as a poll showed Theresa May’s Conservative Party may fall short of a majority. The currency’s weakness lent a hand to British equities, and the FTSE 100 Index rose as miners and energy companies weighed on the broader European gauge. Oil extended losses even as industry data later is expected to show a supply drop in the US. The American drill count is at the highest since April 2015.
Uncertainty about the reliability of polling seems to have helped contain the pound’s retreat, but the moves are a reminder of the potential risks surrounding a series of national elections in Europe this year. Meanwhile, with key central bank meetings next month on both sides of the Atlantic, investors remain focused on this week’s slew of economic data to gauge both the strength of the global economy and the path for interest rates.
“The importance of politics as a market driver currently can’t be overstated,” Societe Generale SA strategist Kit Juckes wrote in a client note.
China’s offshore yuan, meanwhile, jumped the most in four months as funding costs surged amid speculation policy makers were supporting the currency in the wake of a surprise sovereign rating downgrade. The MSCI Asia Pacific Index dropped 0.1 percent, paring its advance for May to 2.6 percent.
The Shanghai Composite rose 0.2 percent, after an earlier gain of 1.1 percent on better-than-expected Chinese factory data.
The Stoxx Europe 600 Index fell 0.1 percent at 10:11 a.m. in London, trimming a monthly gain to 0.8 percent. Futures on the S&P 500 were little changed. The benchmark index slipped 0.1 percent Tuesday, retreating for the first time in eight days.
The pound dropped 0.6 percent to $1.2788. The euro edged less than 0.1 percent lower, heading for a monthly gain of 2.6 percent, its best performance since January. The yen was little changed at 110.85 per dollar after rising 0.4 percent Tuesday.
