Pound rises as British PM announces early election

Bloomberg

The pound jumped after British Prime Minister Theresa May announced an early general election. European stocks declined as traders caught up with a swathe of geopolitical events following the long weekend.
Sterling swung from gain to loss and back again versus the dollar as May set the vote for June 8, before rallying to the highest since February 2. UK stocks fell by the most since November. The Stoxx Europe 600 Index dropped to the lowest level in almost two weeks as mining shares plunged. Iron ore reeled after Citigroup Inc.’s bearish outlook for the raw material.
May said she was calling the election “with reluctance” but that the UK needs stability during Brexit negotiations. The unexpected gamble is likely aimed at strengthening her hand going into talks on leaving the European Union; polls show her Conservative Party is more than 20 points ahead of the main opposition.
“The markets are very uncertain and worried about various outcomes,” Dominic Konstam, Deutsche Bank AG’s global head of rates research, said in an interview on Bloomberg TV. “This just adds another one. We’ve got the tax reform in the US, you’ve got the French and German elections. Now you’ve got this on top.”
A bounce in US stocks on Monday failed to cheer investors in the European session, as the standoff over North Korea’s nuclear weapons program rumbles on and the French presidential election looms. Two candidates who want to take the country out of the region’s common currency remain in contention in the most unpredictable race in recent history.
The first round of voting in French elections is this weekend. Final euro area inflation figures for March are out Wednesday. They’re likely to be unchanged, with underlying pressure tepid. Thursday’s confidence figures may confirm a buoyant consumer outlook and Friday’s PMIs may suggest an acceleration in growth. Morgan Stanley will publish earnings tomorrow.
The bar has been set high. In Europe, Nestle on Thursday may report its slowest quarterly sales growth in a decade. Akzo Nobel reports Wednesday and may outline its plan to counter PPG’s $24 billion takeover attempt. The EIA will release its weekly report Wednesday. US oil inventories probably shrank by 1.7 million barrels last week, according to a Bloomberg survey. Stockpiles in Cushing, Oklahoma, are expected to have fallen by 570,000 barrels.
The FTSE 100 Index fell 1.8 percent, the most since November at 8:40 a.m. in New York. The Stoxx Europe 600 slumped 0.9 percent, led by commodity producers. Futures on the S&P 500 dropped 0.3 percent. The index rose 0.9 percent on Monday, rebounding from a 1.1 percent loss last week. The Bloomberg Dollar Spot Index fell 0.1 percent. The pound was 1 percent higher at 1.2687. The euro rose 0.4 percent to $1.0686.