Tags: Brexit | markets | vote

Global Markets Lurch as Early Results Favor Brexit

Image: Global Markets Lurch as Early Results Favor Brexit
 (Press Association via AP Images)

Thursday, 23 Jun 2016 09:23 PM

Sentiment in markets was whipsawed as results from the U.K.’s referendum showed stronger-than-expected support for Brexit in northeast England, with the pound tumbling almost 4 percent, taking U.K. index futures with it. The yen and gold surged.

Sterling erased a climb of as much as 1 percent, sinking the most since 2009 versus the dollar as 61 percent of voters in the key voting district of Sunderland chose “Leave,” more than the six percentage points above what was predicted in polls before the British vote. Futures on the FTSE 100 Index slid with those on the S&P 500, while Japanese and Australian stocks advanced, even as the yen rallied more than 1.2 percent. Gold jumped with government debt as 10-year Treasuries all but reversed last session’s losses.

“After the early confidence, we could be getting a dose of realism that’s causing some reasonably skittish market movements,” said Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. “It does look like the margin between the two sides is going to be relatively tight, and accordingly sterling volatility is going to remain elevated until we get a more definitive picture.”

The debate over Britain’s future dominated trading in June, with anxiety over the economic impacts of a Brexit, and the boost it could give to anti-establishment sentiment globally, stoking market volatility around the world. Riskier assets from equities to industrial metals rallied this week amid speculation sentiment was shifting toward remaining. Risk assets rallied after voting closed as a YouGov poll put “Remain” in front, only to start paring those gains as a separate survey put the result much closer.

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Currencies

The pound lost 1.9 percent to $1.4588 as of 9:16 a.m. in Tokyo, after earlier touching $1.5018, its first breach of $1.50 since December. It slumped 1.3 percent against the euro as the Australian dollar to the euro and commodity-linked currencies also retreated.

In Newcastle, the “Remain” campaign won with 51 percent of the vote, a smaller margin than was anticipated, while in Swindon “Leave” prevailed. Results from northwest England, the Midlands, Wales and London are yet to come.

Japan’s currency, meanwhile, gained 0.9 percent to 105.17 per dollar and soared 2.8 percent against sterling.

Stocks

Futures on the FTSE 100 dropped 1.5 percent as contracts on the S&P 500 lost 0.4 percent. The U.S. equity benchmark closed 1 percent away from a record on Thursday, a level it hasn’t surpassed in 13 months.

The MSCI Asia Pacific Index rose 0.5 percent, buoyed by the gains in Japan as the Topix index climbed 0.3 percent in Tokyo.

The Kospi index in Seoul was up 0.3 percent, while Australia’s S&P/ASX 200 Index added 0.6 percent. New Zealand equities also maintained their advance despite the change in currency-market sentiment, increasing 0.3 percent.

“We’ll keep swinging from joy to sorrow all day,” Takuya Takahashi, a Tokyo-based senior strategist at Daiwa Securities Group Inc said by phone. “We don’t have calm views, and investors are moving on short-term information. Until we see the final results we’ll keep being swung around by speculative moves.”

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Brexit, markets, vote
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2016-23-23
Thursday, 23 Jun 2016 09:23 PM
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