Asian stocks leap as fears ease over British vote on EU
Asian stock markets jumped and the pound rallied Monday as polls suggest British voters will choose to remain in the European Union in a referendum this week, easing investor worries about a possible “Brexit.”
KEEPING SCORE: Japan’s benchmark Nikkei 225 index surged 2.5 percent to 15,989.94 and South Korea’s Kospi climbed 1.5 percent to 1,981.71. Hong Kong’s Hang Seng added 1 percent to 20,378.81 while the Shanghai Composite Index crept up 0.1 percent to 2,886.49. Australia’s S&P/ASX 200 rose 1 .4 percent to 5,233.40. Benchmarks in Taiwan and New Zealand rose while Southeast Asia they were mixed.
BREXIT: Global investors are focused on Britain’s Thursday referendum on EU membership, with results expected a day later. Market anxiety over the uncertain consequences of a British exit, or a “Brexit,” had been rising as support for the “Leave” side strengthened. However, three polls over the weekend showed that the “Remain” side had recovered some of the ground that had been lost, giving investors more confidence to move into riskier assets.
CURRENCIES: The pound soared on the poll results, rising 1.5 percent to $1.46 from $1.44 in last week’s trading. The dollar rose to 104.64 yen from 104.13 yen in late trading Friday. The euro strengthened to $1.1367 from $1.1276.
ANALYST INSIGHT: “The entire market is now focused on the UK’s EU referendum result,” said Margaret Yang, an analyst at CMC Markets in Singapore. “Judging by the market reaction over the last two days, more volatility is likely this week. It is expected that a vote to remain would lead to a quick unwinding of risk premium and a substantial risk-on rally, whereas a Brexit vote would have the opposite effect.”
ENERGY: Benchmark U.S. crude oil futures rose 47 cents, or 1 percent, to $48.45 a barrel in electronic trading on the New York Mercantile Exchange. The contract had climbed $1.77 to close at $47.98 a barrel on Friday. Brent crude, used to price international oils, gained 42 cents to $49.59 a barrel in London.
WALL STREET: Major U.S. benchmarks ended lower on Friday. The Dow Jones industrial average lost 0.3 percent to 17,675.16. The Standard & Poor’s 500 index fell 0.3 percent to 2,071.22 and the Nasdaq composite fell 0.9 percent to 4,800.34.