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World stocks up as Brexit vote worries ease

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by June 29, 2016 General

Youkyung Lee, The Associated Press
Published Wednesday, June 29, 2016 12:57AM EDT
Last Updated Wednesday, June 29, 2016 7:23AM EDT

SEOUL, Korea, Republic Of — Global stocks rose sharply Wednesday as worries eased about the uncertainty that follows Britain’s vote to leave the European Union. The British pound also rose as talks got underway among European leaders on how to handle the situation.

Britain’s benchmark stock index, the FTSE 100, was up 2.6 per cent to 6,298. It has not suffered much because many of its listed companies have global operation and the pound’s drop to a 31-year low will help their exports and boost the value of earnings repatriated to Britain. Domestic companies have taken a much bigger hit.

Germany’s DAX advanced 2 per cent to 9,636 and France’s CAC 40 gained 2.8 per cent to 4,202. Futures augured a positive start for Wall Street. Dow futures added 0.6 per cent and S&P futures rose 0.7 per cent.

Investors appeared to have set aside their anxiety over Britain’s vote, encouraged by solid data on the U.S. economy and housing market.

But analysts said market volatility could return any time and it is too early to say that investor confidence has made a full comeback since the vote for “Brexit,” a British exit from the EU.

“Stock markets may find it difficult to return immediately to the levels seen before last week’s vote with buyers being wary about being too aggressive in what may yet be just another volatile swing,” said Ric Spooner, chief market analyst at CMC Markets, in a commentary.

Global financial markets were rattled last Friday by the vote’s result, which many investors did not seem to anticipate. Stocks and oil fell, as did the pound, while bonds and gold rose thanks to their perceived status as safe havens. Ratings agency S&P slashed its top-shelf credit rating for the U.K.

The British currency recovered some of its losses this week but remained near its 31-year low. On Wednesday, the pound rose 0.5 per cent to $1.3408. In other currencies, the yen, which strengthened sharply after the British referendum, lost some gains. The dollar rose to 102.69 yen from 102.63 yen. The euro rose to $1.1090 from $1.1080.

In Asia on Wednesday, Japan’s Nikkei 225 jumped 1.6 per cent to 15,566.83 and South Korea’s Kospi gained 1 per cent to 1,956.36. Hong Kong’s Hang Seng index added 1.3 per cent to 20,436.12, while Australia’s S&P/ASX 200 rose 0.8 per cent to 5,142.40. Stocks in mainland China, Taiwan, Singapore and Indonesia also were higher.

Benchmark U.S. crude rose 60 cents to $48.45 per barrel in New York. The contract added $1.52 on Tuesday. Brent crude, used to price international oils, gained 58 cents to $49.84 a barrel in London.

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