Comey testimony lifts US shares; euro dips after ECB holds rates

Oil prices steady after touching 1-month lows

NEW YORK, June 8, (Agencies): US shares rose modestly and European stocks were little changed on Thursday as investors digested testimony from former FBI Director James Comey before a Senate panel, while the euro fell after the European Central Bank kept interest rates on hold and oil prices briefly touched one-month lows.

Comey told US lawmakers in the congressional hearing he had no doubt that Russia had interfered with the election but was confident that no votes had been altered.

Investors also await the outcome of the general election in Britain as voting began on Thursday in a snap vote predicted to give Prime Minister Theresa May a larger parliamentary majority.

The FTSEurofirst 300 of top European equities briefly hit a three-week low of 1,526.29 after the ECB said subdued inflation meant it would continue to pump more stimulus into the region’s economy. It still judged the euro zone economy to be rebounding and signalled it would not cut interest rates further.

MSCI’s all-country world equity index was last down 0.33 points, or 0.07 percent, at 467.3.

The Dow Jones Industrial Average was last up 66.28 points, or 0.31 percent, at 21,239.97. The S&P 500 was up 3.87 points, or 0.16 percent, at 2,437.01. The Nasdaq Composite was up 15.12 points, or 0.24 percent, at 6,312.50.

Europe’s broad FTSEurofirst 300 index closed down 0.04 percent at 1,528.71.

The euro hit its lowest since May 31 against the US dollar of $1.1196 after the ECB announcement. The dollar index, which measures the greenback against a basket of six major rivals, was last up 0.3 percent at 97.016.

Sterling fell 0.2 percent against the dollar to $1.2936 ahead of the British election outcome.

Oil prices rebounded after benchmark Brent crude and US crude prices hit one-month lows of $47.56 and $45.20, respectively.

Those troughs were hit after an unexpected surge in US inventories and the return of more Nigerian crude aggravated concerns about a worldwide glut.

Brent crude was last up 2 cents, or 0.04 percent, at $48.08 a barrel. US crude was last up 12 cents, or 0.26 percent, at $45.84 per barrel.

US Treasury yields edged higher after the ECB’s upgrade of its euro zone growth forecast, with benchmark 10year yields last at 2.201 percent compared to 2.180 percent late Wednesday.

The dollar’s gains pushed gold prices lower. Spot gold prices were last down 0.72 percent at $1,277.13 an ounce.

US

US stocks were higher in early afternoon trading on Thursday after former FBI Director James Comey’s testimony was seen by investors as having no smoking gun that could affect Donald Trump’s presidency.

Investors were concerned that any major revelation by Comey could dampen already flagging momentum for Trump’s agenda of lower taxes and lax regulations.

Bets that Trump can implement his agenda are partly behind a rally that has taken stock indexes to record highs.

Earlier on Thursday, the European Central Bank signaled no further interest rate cuts as euro zone prospects improved, but said subdued inflation meant it would continue to pump more stimulus into the region’s economy.

Investors are also awaiting the results of the UK general election. Opinion polls show Theresa May’s Conservative Party leading between 5 and 12 percentage points over the main opposition Labour Party, suggesting she would increase her majority.

At 12:36 pm ET (1636 GMT), the Dow Jones Industrial Average was up 68.55 points, or 0.32 percent, at 21,242.24 and the S&P 500 was up 4.06 points, or 0.16 percent, at 2,437.2.

The Nasdaq Composite was up 14.46 points, or 0.23 percent, at 6,311.84.

Six of the 11 major S&P sectors were lower, with the defensive utilities index’s 1.04 percent loss topping the decliners.

Financials rose 1.59 percent leading the gainers.

Shares of Alibaba Group Holding were up 11.3 percent at $139.78 after the company said it expected revenue growth of 45-49 percent in the 2018 fiscal year.

Yahoo, which owns a 15.5 percent stake in Alibaba, rose 8.3 percent.

Nordstrom jumped 10.6 percent to $44.78 after the department store operator said that some members of the controlling Nordstrom family have formed a group to consider taking the company private.

Advancing issues outnumbered decliners on the NYSE by 1,624 to 1,188. On the Nasdaq, 1,832 issues rose and 926 fell.

Europe

The UK’s top share index dropped to a three-week low on Thursday as Britons headed to the polls after a tumultuous campaign which saw Prime Minister Theresa May’s lead tighten in recent weeks.

The major FTSE 100 benchmark slid steadily throughout the session to close 0.4 percent lower at 7,449.98 points, after the European Central Bank signalled an end to more interest rate cuts, and ahead of results from Britain’s parliamentary elections.

Mid-caps have outperformed the exporter-heavy FTSE 100 so far this year but the blue-chips have gained back some ground in recent weeks as tightening polls prompted greater caution on domestic stocks.

Inversely, a bigger majority for the Conservatives could prompt institutions to pick up some bargains among midcaps, Mumford said.

US bank Citi advised investors to hedge political risk through the “UK 8”, a list of blue-chip stocks least exposed to domestic sales, while avoiding the “Anti UK 8” stocks with the greatest dependence on the British economy.

While macroeconomic events were front and centre of investors’ minds, some company moves stood out.

Centrica and SSE were among the top 10 blue-chip gainers. Their share prices have dipped in recent weeks as the election approached, with investors concerned about manifesto promises to cap energy prices or nationalise the companies.

Asia

Shanghai and Hong Kong led most Asian markets higher Thursday after Chinese trade data beat forecasts, even as investors await Britain’s election results and testimony from fired FBI boss James Comey on his probe into the Trump administration’s Russia links.

Traders are on tenterhooks ahead of the big events, which could either fuel a sharp sell-off or reignite a rally that has seen some indexes hit multi-year — and even all-time — highs in recent weeks.

Beijing said Chinese exports soared 8.7 percent on-year and imports jumped 14.8 percent, compared with estimates of 7.2 percent and 8.3 percent tipped in a Bloomberg News survey.

The figures came as a relief after a series of weak readings suggested a recent pick-up could be fizzling out despite a pick-up in the global economy.

Shanghai, which had spent most of the morning in the red, ended 0.3 percent higher, while Hong Kong also added 0.3 percent to end above 26,000 for the first time since July 2015.

Sydney, Seoul and Singapore each gained 0.2 percent.

But Tokyo ended 0.4 percent lower, hit by profit-taking and news that the Japanese economy grew at a slower rate than first thought in January-March.

Among Asian energy firms Woodside Petroleum fell 1.6 percent in Sydney while Hong Kong-listed CNOOC shed 0.6 percent. Inpex was down one percent in Tokyo. n Key figures around 0810 GMT: Tokyo — Nikkei 225: down 0.4 percent at 19,909.26 (close)

Hong Kong — Hang Seng: UP 0.3 percent at 26,063.06 (close)

Shanghai — Composite: UP 0.3 percent at 3,150.33 (close)

Oil

Oil prices pared losses on Thursday, having hit one-month lows earlier in the day after unexpected surge in US inventories and the return of more Nigerian crude aggravated investor concerns about an already oversupplied market.

The oil price has slipped below $50 a barrel despite a pledge by the world’s largest exporters to extend an existing cut in production of 1.8 million barrels per day (bpd) into next year in an effort to reduce bulging global inventories.

Adding to concerns about supply outstripping demand, Royal Dutch Shell on Wednesday lifted a force majeure on exports of Nigeria’s Forcados crude, bringing all the country’s crude grades fully online for the first time in 16 months.

Brent crude was flat at $48.06 a barrel by 1450 GMT, having touched an earlier low of $47.56, while US crude futures were up 15 cents at $45.87 a barrel.

The market has also come under pressure from news of rising output from Libya, which together with Nigeria is exempt from the production cut made by the Organization of the Petroleum Exporting Countries and its 11 partners.

The most actively traded Brent derivatives were bearish sell options that would give the holder the right to sell at $45 and $46 a barrel between August and December.

US inventories of crude oil and gasoline surprisingly rose last week as refinery runs declined and exports fell, official data showed on Wednesday.

Gold

Gold slipped on Thursday after the euro lost ground against the dollar and as investors awaited the outcome of Britain’s national election and testimony from former US FBI director James Comey.

The euro declined after the European Central Bank cut its forecasts for inflation and said that policymakers had not discussed scaling back its massive bond-buying programme.

A weaker euro versus the dollar erodes the buying power of euro zone investors for gold, which is priced in the US currency.

Spot gold was down 0.9 percent at $1,275.06 an ounce at 1355 GMT. US gold futures for August delivery shed 1.2 percent to $1,277.40.

Investors were awaiting British election results and Comey’s testimony, which will turn the spotlight on a clash between him and US President Donald Trump.

Those and other uncertainties are providing support to gold, which is likely to resume its rally eventually, even if its correction lower extends in the short term, said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

“It’s quite natural that we see markets taper off some of the recent gains,” he said. “The sentiment on the market at the moment is that gold is a ‘buy on dips’. The question is whether we’ll see a dip of any size once there’s more clarity following today’s events.”

Hansen advised buying if gold declined to key short-term support at $1,265.