Global stocks slide on looming Brexit risk

NEW YORK, United States — World stock markets extended losses Monday as fears heightened that Britain could vote to leave the European Union in next week’s referendum.

Tokyo’s main stocks index dived 3.5 percent to a two-month low point by Monday’s close, as worries over Britain’s EU membership vote on June 23 sparked a rally in the safe-haven yen currency, which in turn hammered shares in Japanese exporters.

Craig Erlam, senior market analyst at Oanda trading group, said “risk aversion” continued to drive markets ahead of “a number of key risk events”.

“The UK referendum next week is right at the top of this list given the destabilization effects that a vote to leave the EU could have on global markets,” he said in a note to investors.

US stocks joined the global retreat, falling for a third straight day and pushing the S&P down 0.8 percent. But shares in professional networking company LinkedIn shot up 46.6 percent on news of its $26.2 billion takeover by Microsoft.

Shares of US travel-oriented equities were especially weak, with American Airlines, Delta Air Lines and United Continental all losing at least 3.5 percent in the aftermath of Sunday’s deadly attack by a lone gunman at a gay nightclub in Orlando, Florida.

London’s FTSE 100 index lost 1.2 percent. In the eurozone, Frankfurt’s DAX 30 index and the CAC 40 in Paris were both about 1.8 percent lower. Banking stocks weighed in Milan, where the main index slid 2.9 percent to its lowest level since February.

In foreign exchange, the British pound hit two-month lows against both the euro and dollar.

The pound’s latest tumble against the dollar “could be the tip of the iceberg” if Britons opt to quit the EU, said Alex Holmes, of Capital Economics.

The European single currency meanwhile sank as low as 119 yen, the lowest level since February 2013.

Central banks on tap

Markets also are on edge as the US, Japanese and British central banks meet this week.

Few expect any move on interest rates from the US Federal Reserve and Bank of England, but observers are divided over whether the Bank of Japan will announce more stimulus.

“Chances of the Fed raising interest rates this month are nil at this point, with a July raise looking less and less likely,” Mark Vickery, of Zacks Investment Research, said in a note to clients.

For Oanda’s Erlam, the Brexit risk is also playing a role in the Fed’s timing.

“The Fed will meet this week and while the (May) jobs report may have given them a reason to put off raising interest rates again, the closing of the gap ahead of the UK referendum is likely the real reason behind the delay,” he said.

Hong Kong’s main stocks index tumbled 2.5 percent and Shanghai dived 3.2 percent, while Seoul sank 1.9 percent and Singapore 1.6 percent.

source: business.inquirer.net

World stocks rise again on stimulus hopes, yuan’s gain

HONG KONG — World stock markets were mostly higher Tuesday as a strengthening yuan and hopes for more central bank stimulus gave investors relief from the mauling that markets have suffered so far this year.

KEEPING SCORE: European stocks were higher in early trading. France’s CAC 40 climbed 0.4 percent to 4,131.18 and Britain’s FTSE 100 added 0.2 percent to 5,831.64. Germany’s DAX dipped 0.3 percent to 9,181.45. U.S. benchmarks were poised to open sharply higher after a long weekend. Dow futures rallied 1.5 percent to 16,148.00 and broader S&P 500 futures jumped 1.5 percent to 1,886.40.

STIMULUS HOPES: Investor sentiment remained positive that central banks would continue to ease monetary policy thanks to comments from the head of the European Central Bank. With the ECB set to discuss policy measures on March 10, Mario Draghi told the European Parliament on Monday that the bank has a range of instruments it can deploy if it decides more stimulus is needed. Earlier, a disappointing report on Japanese economic growth also raised hopes for more policy easing.

RENMINBI RELIEF: China’s strengthening currency also helped boost sentiment. The yuan hovered near its strongest level so far this year a day after the central bank guided the currency, also known as the renminbi, sharply higher. Previous weakness in the yuan triggered worries the Chinese economy was in worse shape than thought. Meanwhile, new yuan loans jumped 71 percent in January, the official Xinhua news agency reported Tuesday, suggesting solid demand in the world’s No. 2 economy.

ANALYST’S TAKE: “Since the start of January everything went south and we really needed some positive news,” said Jackson Wong, associate director at Huarong International Securities. “Factors that were affecting the markets negatively have turned positive now: the yen is weaker, the renminbi is stronger, global markets like the U.S. are stabilizing. All the negative catalysts from January are turning better.”

ASIA’S DAY: Japan’s Nikkei 225 added 0.2 percent to close at 16,054.43 after soaring 7.2 percent the day before, which was its biggest daily gain since September. South Korea’s Kospi rose 1.4 percent to 1,888.30 and Hong Kong’s Hang Seng advanced 1.1 percent to 19,122.08. The Shanghai Composite Index in mainland China surged 3.3 percent to 2,836.57 and Australia’s S&P/ASX 200 was up 1.4 percent to 4,910.00. Benchmarks in Taiwan and most of Southeast Asia also rose.

ENERGY: Benchmark U.S. crude rose $1.28, or 4.4 percent, to $30.72 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $3.23 to settle at $29.44 a barrel on Friday. Brent crude, a benchmark for international oils, added $1.38 to $34.77 a barrel in London.

CURRENCIES: The dollar eased to 114.06 yen from 114.54 yen in Monday’s trading. The euro edged up to $1.1174 from $1.1168. TVJ

source: business.inquirer.net