Stock indexes and the US dollar fell yesterday as a snap general election call in Britain added to a growing list of uncertainties for investors, including saber-rattling in the Korean Peninsula and an election in France.
US vice president Mike Pence arrived in Tokyo after reassuring South Korea of an “iron-clad” alliance with the United States as the reclusive North, which regularly threatens to destroy Japan, South Korea and the United States, has conducted a series of missile and nuclear tests.
In France, opinion polls have for months shown far-right leader Marine Le Pen and centrist Emmanuel Macron qualifying next Sunday for the May 7 run-off.
Disappointing quarterly results from corporate heavyweights Goldman Sachs and Johnson & Johnson dragged Wall Street lower.
The Dow Jones Industrial Average fell 84.96 points, or 0.41 per cent, to 20,551.96, the S&P 500 lost 5.37 points, or 0.23 per cent, to 2,343.64 and the Nasdaq Composite dropped 10.19 points, or 0.17 per cent, to 5,846.60.
The pan-European FTSEurofirst 300 index lost 0.98 per cent and MSCI’s gauge of stocks across the globe shed 0.43 per cent.
Emerging market stocks lost 0.55 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.91 per cent lower, while Japan’s Nikkei rose 0.35 per cent.
Sterling strengthened as British Prime Minister Theresa May called for an early election on June 8, saying she needed to strengthen her hand in divorce talks with the European Union.
Deutsche Bank said the surprise election call is a “game-changer” for the currency, and that it will raise its forecasts for the pound in the coming days.
Risk-aversion favoured the safe-haven yen.
“Dollar-yen has been suffering from risk-aversion, which is reflected in weak stocks and just in general, with a bit of geopolitical fears,” said Alvise Marino, FX strategist at Credit Suisse in New York.
The dollar index fell 0.43 per cent, with the euro up 0.48 per cent to $1.0691.
The Japanese yen strengthened 0.16 per cent versus the greenback at 108.73 per dollar, while Sterling was last trading at $1.275, up 1.50 per cent on the day.
Oil prices were weighed by concerns that US production growth is undermining efforts to cut oversupply, but US crude pared losses after gasoline data showed a draw of about 400,000 barrels in the New York Harbour region.
US crude fell 0.02 per cent to $52.64 per barrel and Brent was last at $55.18, down 0.33 per cent on the day.
US Treasury yields fell as nervousness ahead of France’s first round of Presidential elections this weekend and ongoing geopolitical tensions increased demand for safe-haven US debt.