Another Violent Act Slows Market Stampede into Safe Havens
June 17, 2016
Call it a second shot heard round the world. Campaigning was suspended by both the “leaves” and the “remains” ahead of next Thursday’s U.K. referendum on whether to stay in the EU or abandon such. This hiatus followed the assassination of MP Jo Cox, who had favored remaining in the European Union. Assets perceived as a refuge from major political and economic uncertainty had been strongly bid most of this week but fell back today.
Major beneficiaries of this market reversal today are emerging market currencies like the ruble and rand, share prices and commodities.
- Equities rose 1.1% in Japan, 0.9% in Taiwan, 0.7% in Hong Kong, and 0.4% in Singapore, Indonesia, and China.
- In Europe, Greece’s stock market has leaped over 6%, and there have so far been share price advances of 3.0% in Italy, 2.0% in Spain, 1.5% in the U.K., 1.7% in Switzerland, and 1.4% in Germany and France.
- West Texas Intermediate crude oil is 1.4% higher at $46.84 per barrel.
- Copper and zinc prices rose significantly, but gold is down 0.8% at $1,287.50 per ounce.
The dollar is a big loser today, slipping 0.1% even against the yen. The greenback also19. fell 0.2% against sterling, the loonie and the Australian dollar and 0.1% versus the euro, but it is unchanged relative to the yuan, kiwi and Swissie.
Among 10-year sovereign debt yields, futures trading in Treasuries have matched the 3-basis point increases of German bunds and British gilts, while the 10-year Japanese JGB yield rose 5 basis points.
Euroland’s current account surplus on a seasonally adjusted basis widened sharply to EUR 36.2 billion in April from EUR 26.3 billion in March and 19.2 billion euros in February. The unadjusted surplus over the past 12 reported months equaled 3.2% of GDP, up from 2.7% in the prior 12-month period.
Hourly labor costs in the eurozone accelerated to an on-year growth rate of 1.7% last quarter from 1.3% in 4Q15 and 1.2% in last year’s third quarter.
New Zealand’s manufacturing PMI improved to a reading of 57.1 last month,best since at least last August, from 56.6 in April. New Zealand consumer sentiment increased 2.3% in June.
U.S. housing starts and Canadian consumer price data will be released today. ECB President Draghi speaks publicly.
Copyright 2016, Larry Greenberg. All rights reserved. No secondary distribution without express permission.