Stocks rise, safe havens retreat as Brexit worries ebb
By Nigel Stephenson
LONDON (Reuters) – Global stocks rose sharply on Monday and sterling strengthened broadly while safe-havens including the yen and gold retreated, after polls showed support for Britain staying in the EU regaining momentum before Thursday’s referendum.
Sterling has been at the sharp end of worries Britons will vote to leave the European Union, and the easing of those concerns pushed the pound up 1.9 percent against the dollar – on track for its biggest daily gain since October 2009 – and more than 2 percent versus the yen.
Share prices, which fell globally in recent days on prospects of Britain quitting the bloc as some polls showed the “Leave” campaign ahead, rose strongly.
Wall Street looked set for a positive open, with index futures up 1.2-1.3 percent.
The pan-European FTSEurofirst 300 index added 3.7 percent, led by a 4.5 percent rise in banks, while Britain’s blue-chip FTSE 100 index chalked up a 3.2 percent gain.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.7 percent. Japan’s Nikkei climbed 2.4 percent as the yen lost ground.
Two weekend polls showed “In” regaining the lead and another showed the “Out” campaign’s lead narrowing, though the overall picture is of an evenly split electorate. Bookmakers’ odds have shown those wishing to stay in the EU ahead and Betfair put the implied probability of a vote to “Remain” at 72 percent on Monday, up from 60-67 percent on Friday.
Campaigning resumed on Sunday, having been suspended for three days after British lawmaker Jo Cox was killed in the street in her constituency on Thursday.
Sterling rose as far as $1.4671 and was last up 1.9 percent at $1.4628, having hit a two-week low of $1.4013 on Thursday. It soared 2.3 percent to 153.00 yen and 1.5 percent against the euro to 77.36 pence.
“The momentum has changed, and perhaps this is the first sign of what a lot of the polling experts had been suggesting, which is that the ‘don’t know’ portion was going to be crucial and historically there tends to be a shift towards the status quo in the final days before a referendum,” Bank of Tokyo-Mitsubishi UFJ’s European head of global markets research, Derek Halpenny, said.
“I think that’s what the market is reacting to.”
The euro, which has also suffered due to Brexit worries, strengthened 0.4 percent to $1.1326, having risen as far as $1.1382.
The yen, often sought by investors in times of market tension, fell 0.4 percent to 104.54 per dollar. The dollar fell 0.6 percent against a basket of currencies.
Yields on low-risk government bonds, another asset sought in troubled times, rose. U.S. 10-year Treasuries yielded 1.66 percent, up 4.6 basis points, after hitting a four-year low of 1.518 percent on Thursday.
German 10-year yields were close to 0.05 percent, up from a record low of minus 0.037 percent on Thursday.
Oil prices, which have also been under pressure from Brexit nerves, extended Friday’s gains. Brent crude topped $50 a barrel for the first time since June 14. It last traded at $50.08, up 91 cents on the day.
Gold, another safety play, fell 1.4 percent to just below $1,280 an ounce. It rose 1.5 percent on Friday for its biggest single-day gain since June 3.
(Additional reporting by Shinichi Saoshiro in Tokyo, Anirban Nag, Jemima Kelly and John Geddie in London; editing by John Stonestreet)