Odds for Brexit Ease, while US Markets Erase Losses
After a week of losses, the US markets begun the process of reucperating previous losses by rallying and preventing a sixth day in a row of a downturn. Globally, investors have continued to brace for next week’s vote on whether Britain will remain a member of the European Union, but the pound erased losses today after the shooting death of a U.K. lawmaker coincided with diminished odds that Britain will elect to leave the European Union.
Thursday, June 16, 2016 - 00:00
The Dow Jones Industrial finished up 55.81 points, or 0.32% at 17,695.98, and the S&P 500 gained 1.02 points or 0.05% at 2,072.52, while the Nasdaq dipped 6.32 points, or 0.13% at 4,828.62.
Investors are bracing for a tight race in the British vote on June 23 on whether to leave the European Union. The Bank of England, which kept its rates stable as well on Thursday, said a vote to leave would likely see the pound drop sharply and hurt spending and investment. It also warned that the uncertainty could affect confidence in the global economy. To add to the turmoil a British member of Parliament was shot dead in the street in northern England causing the temporary suspension of campaigning for next week's referendum on EU membership. The lawmaker, Jo Cox, had been a vocal supporter of Britain remaining in the European Union. British PM David Cameron has even suggested postponing the referendum. The prospect of Britain's voting to leave in the June 23 referendum has been rattling the global markets in the last month.
In other global news, Japan’s central bank once again foiled speculation it might further ease monetary policy to help the faltering recovery. The Bank of Japan is pumping about 80 trillion yen - about $769 billion - into the economy each year with purchases of Japanese government bonds and other assets. Japanese stocks sank 3% after the Bank of Japan decided not to increase its economic stimulus efforts. The yen jumped nearly 2% against the dollar, reaching its highest level in two years. Japanese officials have said they may intervene in currency markets if the yen appreciates too much. Japan’s economy is heavily reliant on exports, which are hurt when the yen rises sharply in value against other currencies.
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