U.S. stock futures rose in morning trading, rebounding from overnight lows.
Futures pointed to a 0.2% opening gain for the S&P 500, recovering from a brief period of weakness, after British voters deprived Prime Minister Theresa May and her ruling Conservative Party of a majority in Parliament.
U.S. stocks are near records, and traders said they expect major indexes to keep drifting higher despite political uncertainty in Europe.
"It's hard to argue stocks are cheap here, but they're not majorly, maniacally expensive. With the lack of other alternatives, and with central banks remaining so cautious, there's no reason not to buy risk assets," said John Brady, managing director at futures brokerage R.J. O'Brien.
The S&P 500 generates less than 3% of revenue from the U.K., according to FactSet.
In the U.K., however, moves were more pronounced as investors braced for more volatility.
Stocks tied to the U.K. economy fell and the pound dropped to as low as $1.2636 before recovering to $1.2746. Investors fear a hung parliament would usher in a fresh period of political uncertainty and make it more difficult for the U.K. to secure a favorable deal in its negotiations to exit from the European Union.
Markets elsewhere were fairly quiet, with the Euro Stoxx 50 index down less than 0.1%.
While this sort of event used to generate a more volatile trading environment globally, "The world seems pretty calm about it," said Adam Karrlsson-Willis, vice president of equity trading at INTL FCStone Financial.
"We have two years of question marks now," he said. "Everyone is sitting on their hands again to wait and see...nobody wants to make a distinct move either way."
London's FTSE 100 index, which generates roughly 70% of its revenue overseas, rose 0.7% Friday as companies benefited from a weaker currency. Shares of HSBC Holdings, which generates just 21% of revenue from the U.K., alongside commodity giants BP, Royal Dutch Shell and Glencore all gained more than 1%.
But companies more dependent on business inside the U.K., including Lloyds Banking Group, Royal Bank of Scotland Group, Taylor Wimpey and Barratt Developments all moved lower as investors prepared for a period of uncertainty on the government's budget priorities, a more challenging path for Brexit and a possible hit to the economy.
"Brexit still goes ahead, but who is negotiating and what their position is and whether they can do a deal and get it passed through Parliament is less clear," said John Stopford, head of multiasset income at Investec Asset Management.
U.K. banks fell as 10-year U.K. gilt yields edged down to 1.024% from 1.032%, according to Tradeweb, reflecting a judgment that U.K. rates might remain lower for longer. Labour policies on U.K. banks are also quite different to the Conservative Party's, according to strategists at RBC Capital Markets, pointing to a possible consultation on the breakup of RBS and higher bank levies.
London's FTSE 250 index, which generates about 55% of revenue in the U.K. and underperformed as polls tightened ahead of the vote, fell 0.2%, led lower by consumer-geared companies.
Still, longer term, some investors see the election outcome as potentially supportive of U.K. assets, due to the chance of greater fiscal stimulus under the new government and a "softer" Brexit.
"Uncertainty about the U.K. government is probably bad for the [U.K.] currency in the short term but could be quite good for the economy," said Ben Kumar, investment manager at Seven Investment Management.
Earlier, Japan's Nikkei rose 0.5% as the dollar climbed against the yen, supporting exporters in the index. Shares of SoftBank jumped to 17-year highs following a surge in Alibaba shares in the U.S., in which it has a large stake.
Korea's Kospi ended at a record high, helped by a rise in shares of Samsung Electronics, which has the biggest weighting in the index.
In other markets, the WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was up 0.5%. Yields on 10-year Treasurys edged up to 2.216% from 2.195% Thursday. Yields move inversely to prices.
Corrie Driebusch contributed to this article.
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(END) Dow Jones Newswires
June 09, 2017 09:28 ET (13:28 GMT)