Lots on the agenda
If you looked on the calendar today, you might have seen the following schedule; ECB Decsion, UK Vote, Comey Testimony. All had the potential to send the markets on a run, in either direction. At the end of the day the markets didn’t look too much different than any other session.
ECB Holds Steady
The European Central Bank left its rates unchanged and -.40%, but did change its outlook a bit. The ECB is a little less dovish going forward. They raised their GDP forecast from 1.8% to 1.9% for this year, and raised projections for 2018 to 2019. Inflation forecasts were also cut from 1.7% to 1.5%. These are all sign that they may be moving away from the zero to negative interest rate environment sooner than expected. The Euro traded lower and closed -40 at 112.205
Tame Testimony
There were no smoking guns or big surprises from former FBI Director Comey’s testimony in D.C. once this became apparent, the equities and U.S. Dollar reacted positively. The USD surpassed 97.00 again, and went out for the day just below that level, trading near +22 for the day.
Equities reacted in a similar fashion. THe S&P and Dow futures had small rallies as the hearing progressed. Both indices closed with small gains for the session. The Dow futures were up 22, at 21185, and the S&P 500 futures closed at 2433.25, up 1.50 for the day.
Election results still to come
The UK Parliamentary election results won’t be known until later Thursday night. Early indications are that the balance between the Labour Party and Conservatives will not change much. With the Conservatives holding serve, Theresa May will remain Prime Minister. That means Brexit will still be on, which will be favorable to stability in the markets.If Labour comes out ahead, the results would be a bit of a surprise and could possibly kick up volatility along with uncertainty of the near future. That would not me market friendly.
UPDATE 4:30 PM CST
Forecasts have the Conservative Party winning most seats, but not a majority. This will give the markets some uncertainty in regards to the Brexit plan, and we could see a volatile overnight session.
John Weyer
Director Commercial Hedging
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