Japanese stocks headed south on Wednesday morning, led by banking shares as Japanese government bond yields fell 0 percent, a rate not hit since November, and continuing geopolitical tensions kept traders on edge. Despite the choppy trading in Japan on Wednesday, traders largely believe that the selloff is nearing its end and that strong earnings will reverse the trend in the near term. MSCI’s broadest index of Asia-Pacific shares outside Japan traded down 0.6 percent.
Asian markets followed their European counterparts which suffered across the board on Tuesday after British Prime Minister Theresa May called for early elections to be held on June 8. Britain’s FTSE 100 plummeted 2.5 percent after May’s announcement, its worst single-day loss in 10 weeks, while the pan-European STOXX 600 fell 1 percent. France’s CAC 40 ended the day with a 1.6 percent loss, its worst trading day in nearly seven months.
Currencies React to Politics
The pound traded at $1.2824 on Wednesday morning after gaining 2.2 percent overnight and breaking its 200-day moving average. The dollar remained near six month lows against the yen, trading at 108.55 on Wednesday morning. Traders continued looking towards safe haven assets including gold which headed towards Monday’s high and traded at $1,287.10 per ounce on Wednesday.
Oil prices are continuing to struggle following reports that U.S. production will hit two-year peaks in May. U.S. WTI crude was down 12 cents on Wednesday morning to $52.29 per barrel while Brent crude was also down 16 cents per barrel to $54.73 per barrel.