Brexit on the Mind and a U.S. Birthday

July 4, 2016

On this 240th anniversary of the U.S. Declaration of Independence, U.S. markets are closed, depleting currency markets of some leadership.  The dollar is little changed against other monies like the euro, yen and sterling.

Nigel Farage, head of the UKIP Leave Party, resigned, creating more confusion about Britain’s next government and when the Brexit timetable might kick in.

Stocks had risen today in Japan, China, Singapore, Hong Kong, India and South Korea, but Brexit concerns and uncertainty are weighing on European Bourses, where Italy’s market has dropped over 1.0%.  The FT, Dax, and Cac are down by 0.6%, 0.5% and 0.7%.

British Chancellor of the Exchequer Osborne said the budget would not be balanced by 2020 as intended previously because of the shock to growth from Brexit.  IMF Director Lagarde predicted a 1.5-4.5% scale back of British growth over the coming few years.

Gold jumped 1.2% to $1,354.8 per ounce.  Silver advanced even more sharply.  Oil dipped 0.2% to $48.90 per barrel.

The 10-year British gilt yield slid two basis points to 0.84%.

Japan’s monetary base recorded on-year growth of 25.8% in the second quarter, down from 28.8% in 1Q and 34.0% in 2015.  According to a central bank study, corporate expectations of long-term Japanese inflation are getting reduced.

The Sentix measure of investor sentiment toward the eurozone fell sharply in July to an 18-month low of 1.7 from 9.9 in June.  The U.K. referendum was blamed.

The British construction purchasing managers index fell 5.2 points to 46.0 in June, lowest in seven years, and most of the survey was conducted before the referendum.  So more weakness lies ahead no doubt.

Producer prices in the euro area increased 0.6% in May, helped by a 1.7% jump in energy.  Non-energy edged up 0.2% on month but fell 1.0% on year.  Energy costs were still 10.8% lower than in May 2015.

ISIS claimed responsibility for a suicide bombing yesterday in Baghdad that killed over 200 people in a shopping district.

Australian building permits fell 5.2% on month and 9.1% on year in May.

The Canadian manufacturing purchasing managers index weakened 0.3 points to a 3-month low of 51.8 in June.

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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