The daily business briefing: June 8, 2017
Markets on edge as U.K. votes and ECB meets, former South Korean minister convicted in Samsung merger case, and more
European markets cautious as U.K. votes and ECB meets
European stocks edged up early Thursday on a huge day for the region's markets, with British voters going to the polls in snap parliamentary elections and the European Central Bank holding a key meeting. In the U.K., Conservative Prime Minister Theresa May called the early vote aiming to increase her party's majority in the House of Commons to strengthen her positions on the terms of Britain's exit from the European Union, but recent polling gains by the opposition Labour Party have put the outcome in doubt. The ECB is expected to hold off on any changes to its economic stimulus program because inflation remains too low, but analysts hope to get some guidance when the ECB announces its latest policy decisions Thursday afternoon.
Former South Korean minister convicted in Samsung merger case
A South Korean court on Thursday convicted former health minister Moon Hyung-pyo of pressuring the National Pension Service, which he then oversaw, into backing a controversial Samsung merger. A former executive at the pension fund, Hong Wan-sun, also was found guilty of swaying the investment committee into backing the deal, even though he knew the terms were unfair to Samsung C&T shareholders and could therefore be bad for the pension fund. The pension service was a key investor in Samsung, and its vote helped Samsung narrowly get the deal approved. The merger helped Samsung Vice Chairman Lee Jae-yong consolidate his control over the company, South Korea's biggest business conglomerate.
Stocks gain on easing concerns of reaction to Comey testimony
U.S. stocks made moderate gains on Wednesday in what analysts interpreted as a sign of relief after pre-written Senate testimony from former FBI Director James Comey provided no major new revelations about the investigation into Russian interference in last year's presidential election. Comey, whom Trump fired in May, won't formally testify before the Senate Intelligence Committee until 10 a.m. Thursday, but the content of his written remarks, released Wednesday, appear to have been priced into the market, with investors expressing confidence that Comey's testimony won't create new obstacles to Trump's pro-business legislative agenda. "The testimony wasn't as disastrous as it could have been," said Peter Costa, president of trading firm Empire Executions. U.S. stock futures edged up early on "Super Thursday," with Comey testifying as the U.K. votes in an election that could spell Brexit changes, and the ECB holds a key meeting.
Trump vows 'first-class' infrastructure system
President Trump vowed Wednesday to use $200 billion in public funds to generate $1 trillion in investment to make overdue upgrades to create a "first-class" system of roads, bridges, and other infrastructure. "America must have the best, fastest, and most reliable infrastructure anywhere in the world," Trump said. The president derided Democrats in Congress as "obstructionists" for opposing his agenda, calling on senators to pass a health care reform bill and cut overseas spending to make improvements at home. "It's time to rebuild our country" and "put America first," he said.
Rising U.S. crude inventory drags down oil prices
U.S. crude oil futures fell by 5 percent on Wednesday after an unexpected rise in U.S. crude and gasoline inventories increased fears that a deal to extend output cuts would not resolve a global glut. Forecasters had projected that U.S. crude stocks would decline by 3.5 million barrels, but the U.S. Energy Information Administration reported that they had increased by 3.3 million barrels to 513 million barrels. Gasoline inventories also rose unexpectedly. "These figures spell a setback to the joint effort by OPEC and some non-OPEC countries to curb their output," said Abhishek Kumar, senior energy analyst at Interfax Energy's Global Gas Analytics in London.