Markets regained some composure after a weak start boosted by gains in the financial sector. Gold drifted down -0.41% along with investor sentiment about the global macroeconomic outlook and oil price collapsed on data of an increase in US stockpiles.
Energy shares were a drag on indices with Newfield Exploration down -6.95% to $28.90, Devon Energy falling -5.84% to $31.92 and Anadarko Petroleum -5.86% to $47.17.
Data from US Energy Information Administration indicated that stockpiles have increased over last nine weeks.
The S&P 500 rose +0.16% and NASDAQ +0.36% while the Dow notched up a gain of +0.18%. Financials were among the biggest gainers with Intercontinental Exchange up 3.36% to $63.62 and Goldman Sachs rose +0.58% to $215.78.
- Dow 21,173.69 +0.18%
- S&P 500 2,433.14 +0.16%
- NASDAQ 6,297.38 +0.36%
- Russell 2000 1,396.67 +0.13%
- NYSE Composite 11,667.73 -0.03%
- Gold 1,287.90 -0.41%
- Oil WTI $45.80 +0.17%
- 10-year yield 2.18% +0.03%
Elsewhere, the slide in energy prices is already feeding into the European Central Bank's inflation outlook which is widely expected to be trimmed at the meeting on Thursday.
Anonymous sources according to Bloomberg say that consumer price growth is now at 1.5% for 2017, 2018 and 2019 compared to the 1.7%, 1.6% and 1.7% forecast in March.
Economic growth is also projected to be revised upwards. The market sees the cut as a signal that the ECB will take a less aggressive tone in its long-awaited policy decision and expect policymakers to say the risks to economic growth is balanced.
Meanwhile, the pound rose against the dollar ahead of tomorrow's vote in the UK to $1.30. The worst outcome for investors according to Viraj Patel, ING FX strategist, is a hung parliament with sterling potentially plunging to a low come Friday of $1.20.
A Conservative win said Patel would be "modestly sterling positive" unless it won by a greater majority which would be supportive of the pound.
Bloomberg compiled analysts' views and showed a Labour party win is seen as hurting the pound in the short term but not nearly as much as a hung parliament with a projection range from $1.33 to $1.33.
Investors will also have former FBI director's James Comey's opening statement to digest ahead of the Senate Intelligence Committee meeting also slated for Thursday.
The Comey statement has been released today. It makes for interesting reading as Comey asserts: "I felt compelled to document my first conversation with the President-Elect in a memo. To ensure accuracy, I began to type it on a laptop in an FBI vehicle outside Trump Tower the moment I walked out of the meeting."
Comey went on to describe his first one-to-one meeting with President Trump and recalls an uneasy set up at the dinner they had together.
Comey writes: "A few moments later, the President said, “I need loyalty, I expect loyalty.” I didn’t move, speak, or change my facial expression in any way during the awkward silence that followed. We simply looked at each other in silence."
Whether the market and the dollar can withstand the revelations and take it in its stride will be seen after the testimony. It will surely hinge on whether investors believe Comey's testimony is likely to stop any momentum of the administration’s infrastructure and tax plan.