Australian shares are poised to edge lower, as the Australian dollar hit its highest level since January 2 overnight as traders mull the potential for the Reserve Bank of Australia to lift interest rates in 2024.
Wall Street was closed for Independence Day. European shares advanced with the FTSE 100 rising 0.9 per cent amid expectations that Labour will easily win a majority mandate.
Iron ore futures climbed to the highest level in nearly a month on optimism for improvement in demand from China.
The yield on the UK 10-year note was 3 basis points higher to 4.2 per cent. The yield is 2 basis points higher over the last month, and 21 basis points lower over the last year. Exit polls showed Labour would win 410 seats, securing a majority of 170.
“There is no denying that a new government will face significant challenges up ahead and that can weigh on UK assets further down the line, but for now, a seemingly calm election should anchor UK stocks and keep the pound relatively calm,” said Daniela Hathorn, senior market analyst at Capital.com.
Hathorn said the focus remains on the Bank of England and its policy mandate, which has given no clear signs of when it will be able to start cutting rates. “Markets are hopeful of a September start, but ongoing concerns about wage pressures in the services sector are keeping the central bank from making a move just yet,” she said.
Wael Makarem, financial markets strategist at Exness, said the pound has appreciated since the beginning of the week as market sentiment remains positive, with expectations of a significant victory for Labour Party leader Keir Starmer.
“A decisive Labour win is seen as the base case, and confirmation of this outcome could further strengthen the British pound by eliminating any lingering risk premium,” Makarem said. “However, a tail risk remains if the Conservatives perform better than expected, potentially leading to a hung parliament. This scenario could introduce uncertainty and weaken the Sterling in the near term.”
French stocks advanced for a second day with a 0.8 per cent rise amid intensified efforts by opponents of France’s National Rally (RN) to prevent the far-right party from gaining power, Reuters reported.
An opinion poll on Thursday showed RN is expected to fall short of an absolute majority in the second round of a parliamentary election on Sunday.
Stocks in focus
BHP misses internal targets, docks incentives across global workforce BHP’s top brass has cut employee incentives around the globe based on failures to hit internal performance targets.
Tamawood profit jumps, but can’t predict FY25 earnings Chairman Robert Lynch said factors such as the Queensland election, weather and land shortages meant it was “impossible” to predict the builder’s performance.