Investing.com - Here are the top five things you need to know in financial markets on Friday, June 9:
1. U.K. elections result in hung Parliament
U.K. Prime Minister Theresa May’s plan to achieve a “strong and stable” government backfired as the Conservative Party lost its majority in the results of the general elections announced on Friday.
With 649 of 650 seats declared, the Conservatives had won 318 seats. Though the biggest single winner, they failed to reach the 326-mark they would need to command a parliamentary majority. Labour had won 261 seats.
With no clear winner emerging from Thursday's election, a wounded May signaled she would fight on, despite calls from the opposing Labour Party to step down.
2. Pound tumbles over government uncertainty
Britain's pound took a battering on Friday after Prime Minister Theresa May's Conservative Party lost its parliamentary majority in elections.
The hung Parliament has the potential to disrupt Brexit negotiations with the U.K. scheduled to begin talks on June 19 to leave the European Union.
Cable sank 1.74% by 5:50AM ET (9:50GMT) to 1.2731, while the pound also dropped 0.63% and 0.45% against the euro and yen, respectively.
3. Global stocks higher as risk events fade
Global stocks traded higher, looking past the British Conservative Party’s failure to achieve a majority, as they breathed a sigh of relief after putting the risk event behind them, along with the fact that former FBI director James Comey’s testimony on Thursday failed to produce a “smoking gun” that could derail the political situation in the United States.
European stocks traded broadly higher on Friday as the benchmark Euro Stoxx 50 advanced 0.34% by 5:52AM GMT (9:52GMT), while Germany’s DAX gained 0.44%. In the U.K., London’s FTSE led advancers with gains of 0.76% as British exporters benefitted from the weaker pound.
Earlier, Asian equities also returned broad gains. China's Shanghai Composite ended up 0.26%, while Japan's Nikkei traded up 0.46%.
U.S. stock futures pointed to a higher open on Wall Street in a session with no major economic reports. At 5:53AM GMT (9:53GMT), the blue-chip Dow futures rose 0.15%, S&P 500 futures gained 0.14% and the Nasdaq 100 futures edged forward 0.09%.
4. Oil on track for weekly losses of 4%
Oil edged higher on Friday, but was still on track for weekly losses of around 4% as market players continued to worry over the fact that increasing production from both the U.S. and Nigeria could derail OPEC’s efforts to curb the global supply glut.
In that light, investors awaited the latest data from Baker Hughes on U.S. drilling, out later on Friday
The energy services provider said last week that U.S. drillers had added rigs for the 20th week in a row, the longest such streak on record, implying that further gains in domestic production are ahead.
The U.S. rig count rose by 11 to 733, extending a year-long drilling recovery to the highest level since April 2015.
U.S. crude oil futures gained 0.53% to $45.88 at 5:55AM GMT (9:55GMT), while Brent oil traded up 0.46% to $48.08.
5. Gold drops on dollar strength with eyes on Fed
Gold prices slid lower on Friday, as the dollar regained some ground after Thursday’s three major risk events, and markets looked forward to a widely expected rate hike from the Federal Reserve (Fed) next week.
Gold for August delivery on the Comex division of the New York Mercantile Exchange sank $2.83, or around 0.2%, to trade at $1,276.67 by 5:59AM GMT (9:59GMT), while the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.47% at 97.41.
According to Investing.com’s Fed Rate Monitor Tool, markets had priced in a 90% chance that the Fed will tighten policy on June 14, increasing interest rates by 25 basis points.
Still, markets remained skeptical that the American central bank would make another move before the year’s end with odds at only around 37%.