Asian shares wobbled in early Thursday trade as investors braced for any surprises from former FBI director James Comey’s congressional appearance, the European Central Bank’s policy meeting and the UK general elections. MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.27 percent while Japan’s Nikkei rose 0.3 percent thanks to the dollar’s rebound against the yen. Wall Street shares ticked up on Wednesday, despite sharp decline in energy prices, after written testimony from Comey did not add major revelations about an investigation into Russian meddling with last year’s U.S. presidential election. The 10-year U.S. Treasuries yield ticked up to 2.185 percent after having fallen to a seven-month low of 2.129 percent on Tuesday. Many investors are wary ahead of Comey’s Senate appearance later in the day for any hints that President Donald Trump may have been engaged in obstruction of justice – an offence that could lead to impeachment hearings. “If the hearing does not produce clear-cut evidences of obstruction of justice, uncertainties will remain but for market the issue will likely be put on a back burner,” said Hiroko Iwaki, senior fixed income strategist at Mizuho Securities. “Unless you assume there will be a complete chaos in U.S. politics or a downturn in the U.S. economy, it is hard to see further falls in U.S. bond yields,” she said.
In the foreign exchange market, the dollar stayed near its seven-month low against a basket of currencies as doubts over Trump’s ability to push through his stimulus plans have eroded the greenback’s gains late last year. The dollar index stood at 96.695 , near Wednesday’s seven-month low of 96.511. The euro traded at $1.1258, near its seven-month high of $1.1285 touched earlier this month, ahead of the European Central Bank’s policy meeting later in the day. ECB policymakers are set to take a more benign view of the economy and will even discuss dropping some of their pledges to ramp up stimulus if needed, sources with direct knowledge of the discussions told Reuters.
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Against the yen, the dollar bounced back a tad to 109.74 yen from Wednesday’s 1-1/2-month low of 109.115. Sterling held firm at $1.2957, near its highest levels in two weeks, as all eyes were on the UK general election.
The pound gained as much as 4 percent after Prime Minister Theresa May called a snap election seven weeks ago, as polls had initially suggested a landslide win for her Conservative party that would give the prime minister a stronger hand in Britain’s negotiations on leaving the European Union. But recent polls suggested a narrowing lead for May, with some pointing to the chance that the Tories may not win an outright majority, capping the pound’s gains.
Oil prices licked wounds after sharp falls on Wednesday to a one-month low, following an unexpected increase in U.S. inventories of crude and gasoline that fanned fears that output cuts by major world oil producers have not done much to drain a global glut. Brent crude futures traded at $48.36 per barrel, up 0.6 percent so far on Thursday, though they had fallen 4.1 percent the previous day.