Tic-tac-toe with mega stakes

Editorial | 6 Jun 2017

Everything seems to be set for a game of tic-tac-toe with mega stakes.

The game will be played on Thursday, but in a special way. But investors can only look on from the sidelines - probably with growing nervousness.

That's the day of Britain's snap election when voters will select who will lead them in the Brexit negotiations - and comes just five days after terrorists killed seven people in the heart of London.

Back in April when Prime Minister Theresa May shocked the nation with her snap-election call, she was full of confidence. She thought she would win an overwhelming majority in parliament and, therefore, a free hand to wrestle with the European Union.

That's her plan and the campaign has been focused on her, rather than the Conservative party, under the tagline, "Theresa May. Strong and stable leadership."

But things have clearly gone very wrong.

Just a few days before the election, opinion polls showed Labour leader Jeremy Corbyn catching up at lightning speed. A YouGov projection even revealed that, instead of an overwhelming majority for the Conservatives, Britons could well end up with a hung parliament at Westminster.

And that's going to mean big trouble.

Other polls also pointed to a stronger showing by Corbyn than originally thought - and hat's got May worried, as well she should be.

Suddenly, and without fanfare, her rallying banner was replaced with the words, "Theresa May and the Conservative Party. A Brexit deal for a Bright Future."

It seems that she's no longer as confident as before and has to appeal to the loyalty of Conservative supporters while trying to ramp up Brexit sentiments.

That's a risky shift. Had her party not committed its "Dementia Tax" blunder - a phrase created to mock the Tory plan to limit welfare payments to the elderly - the prime minister might have been spared such unexpected twists and turns.

Also on Thursday, across the Atlantic, there's another event taking place that also promises a big impact. That's when former FBI director James Comey testifies in Congress as the investigation into US President Donald Trump's alleged ties with Russia continues.

The sacking of Comey in the middle of the FBI's investigation might appear shocking but it was a characteristic Trump move.

Will Comey disclose more details about his conversation with Trump during which the president reportedly asked him to stop an investigation into former security advisor Michael Flynn, who is the subject of a congressional probe into possible links between Trump's campaign and Russia?

Wall Street tumbled several hundred points two weeks ago because of political uncertainty in Washington. Will Comey's testimony set off a new political bomb? Wall Street is probably praying that won't happen.

The European Central Bank will also meet on Thursday. It's no secret that the ECB's dovish president Mario Draghi is under pressure from members - Germany in particular - to accelerate withdrawal of quantitative easing measures it rolled out after the financial tsunami and during the European debt crisis.

Will Draghi give any signal afterwards?

Any of the above tic-tac-toe scenarios could cause ripples across the markets.

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