News-packed Thursday will test financial markets’ calm

The world’s on edge over everything from rising Middle East tension to an uncertain U.K. election to the turmoil surrounding President Donald Trump’s administration. Yet financial markets keep chugging along, and a news-packed Thursday isn’t expected to disrupt their calm.

Call it the Teflon market.

The world’s on edge over everything from rising tension in the Middle East to an uncertain U.K. election to the turmoil surrounding President Donald Trump’s administration.

Yet financial markets chug along as if nothing’s amiss — global stocks are churning just 0.4 percent below all-time highs, while volatility in equities, bonds and currencies remains dormant and money continues to pour into riskier developing nations.

It’s a pattern that’s held for the better part of the year, with the odd bout of angst thrown in. Investors have discounted geopolitical risks as idiosyncratic and focused instead on a global economy that’s powering higher amid persistently low inflation. With central banks assuring they’ll remove years of stimulus only gradually, risk tolerance remains robust.

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“While you may get little spikes in risk aversion at times, markets are looking through them, as long as the underlying fundamentals remain supportive,” said Peter Kinsella, a senior currency and rates strategist at Commonwealth Bank of Australia from London.

Then there’s Thursday.

The European Central Bank’s rate decision will unveil officials’ views on inflation and how long they’ll leave the monetary spigot flowing. Former FBI Director James Comey testifies to a Senate committee on his interactions with President Trump. And the day ends with the outcome of a U.K. election that polls show tightening before the vote.

“Investors are mindful of the event risks, but the liquidity trade is by far the most important and most dominant factor,” said Mark Nash, head…

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