Safe-havens stayed in favor as gold and bonds climbed ahead of presidential elections in France and on escalating tensions between the United States and North Korea.
Equities were largely sidelined with MSCI’s broadest index of Asia-Pacific shares outside Japan off 0.1 percent to the lowest since mid-March.
Japan’s Nikkei .N225 eased 0.2 percent, in line with losses across the region.
Sterling surged to a more than six-month top against the dollar after British Prime Minister Theresa May called an early general election for June 8, seeking to strengthen her party’s majority ahead of Brexit negotiations.
“We expect that the PM’s gamble is likely to buy her more time as well as room for maneuver in the Brexit negotiations as she will depend less on fringe groups in her own party,” said Citi’s chief global political strategist, Tina Fordham.
“That may reduce the risk of a negotiation failure and thus ‘chaotic Brexit’, but also of the UK remaining in the Single Market in the long-term or even reversing the decision to leave the EU.”
The pound was lording it at $1.2846 GBP= today having shattered a months’ old trading range with a jump of 2.2 percent overnight. It also cleared the 200-day moving average for the first time since June, putting the squeeze on a raft of speculative short positions.
The dollar was also undermined by an eroding interest rate advantage as U.S. bond yields dived to five-month lows. Yields on 10-year Treasury paper sank to 2.17 percent, a world away from the 2.629 peak seen in March.
A run of disappointing U.S. economic data and doubts the Trump administration will progress with tax cuts have quelled expectations of faster inflation and boosted fixed-income debt.
Goldman Sachs (GS.N) lost 4.7 percent in the largest daily drop since June after its earnings missed expectations as trading revenue dropped.
In commodity markets, the urge for safety helped lift gold to $1,287.70 an ounce and back toward Monday’s peak of $1,295.42.
Oil prices slipped as U.S. crude stockpiles fell by less than expected and a U.S. government report said shale oil output in May was likely to post the biggest monthly increase in more than two years.
Brent crude was last down 7 cents at $54.82 a barrel, while U.S. crude fell 5 cents to $52.36. – Reuters