IFC Markets - Analytics

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    Awaiting Brexit vote

    US stock market slipped on Wednesday as polls indicated no decisive lead for either “leave” or “remain” votes ahead of June 23 referendum about UK’s possible exit from European Union. The dollar weakened as pound, euro and yen extended gains: the live dollar index data indicate the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, closed down 0.5% at 93.513. An online poll by Opinium indicated 45% of respondents were in favor of leaving the EU with 44% expressing support for remaining in union while 9% were undecided. A separate YouGov poll showed voters preferring remain by a 51% to 49% margin. Federal Reserve Chair Janet Yellen said in her testimony to House Financial Services Committee that US economic growth is accelerating in the second quarter and she expects there will be a corresponding improvement in jobs growth. Economic data were positive on Wednesday showing the existing home sales rose 1.8% in May to their highest level in nearly a decade. Yellen’s comments and the housing data were shrugged off by markets. The Dow Jones Industrial Average lost 0.3% settling at 17780.83. The S&P 500 closed 0.2% lower at 2085.45. The Nasdaq Composite Index slipped 0.2% to close at 4833.32. Today at 14:30 CET initial jobless claims and unemployment claims will be released in US. The unemployment claims are expected to fall. At 15:45 CET June Manufacturing PMI will be released. The tentative outlook is negative. At 16:00 CET May New Home Sales and Leading Indicators will be published. The outlook is negative.

    European stocks rose for the fourth session on Wednesday as investors bet UK will remain in the EU. The euro gained against the dollar. The Stoxx Europe 600 rose 0.4%. Insurance stocks gained while bank shares were mixed: British Standard Chartered rose 2.1% while Banca Monte dei Paschi di Siena lost 1.5%. Germany’s DAX 30 index rose 0.6% to 10071.06. France’s CAC 40 index added 0.3% and UK’s FTSE 100 index gained 0.6%. Today British referendum whether the UK will remain in European Union will be held. Results for the first counting areas are expected at 00:30 CET on Friday. At 10:00 CET June Manufacturing, Services and Composite PMIs will be released in euro-zone today. The tentative outlook is negative.

    Asian stocks are edging higher in thin trade with investors awaiting Britain’s vote on country’s European Union membership. Nikkei ended 1.1% higher today helped by weaker yen as investors covered short positions ahead of UK referendum. The turnover was the second lowest this year at 1.57 trillion yen.

    Oil futures prices are rebounding today after closing lower on Wednesday on smaller than expected drawdown of US stockpiles. The 917000 barrels drop in crude inventories last week was significantly lower than the 5.2 million-barrel drop reported by the American Petroleum Institute trade group late Tuesday. August Brent crude fell 1.5% to $49.88 a barrel on London’s ICE Futures exchange yesterday.

    Gold is rising after falling to two-week low today on cautious optimism that British voters would opt to stay in the European Union.

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