This Week, the Prevailing Theme is Caution
US markets were edging higher on Tuesday morning as investors the world over braced themselves and waited for British voters to decide the fate of that nation’s membership in the European Union.
Tuesday, June 21, 2016 - 00:00
All eyes are on Britain as new opinion polls and betting markets indicate that Britons are slightly more likely to vote to remain in the European Union in a referendum this Thursday. Uncertainty about the outcome has weighed heavily on global markets, and polls suggest the result will be close. Both sides predict economic uncertainty and consequences if the other wins.
Meanwhile, in early afternoon trading on Wall Street, the Dow Jones Industrial rose 0.13% and the S&P 500 is also up 0.21%. The Nasdaq, however, has edged down 0.05 percent. Shares of AT&T added 1.1% and Verizon gained 1.2% as phone companies made larger gains than any other sector of the market.
Janet L. Yellen, the Federal Reserve chairwoman, spoke to the Senate on Tuesday and said the American economy faced a number of uncertainties that required the Fed to proceed cautiously in raising interest rates. Those problems include a slowdown in job growth in April and May. Ms. Yellen said the Fed would watch carefully to see if that slowdown was temporary or a sign of a bigger problem. The Fed Board of Governors report submitted to Congress said forward price-to-earnings ratios for equities have increased to a level well above their median of the past three decades. Also weighing on the Fed's decision is Britain's vote on its EU membership on Thursday, which Yellen said could cause market volatility.
US Bond prices stabilized after Monday’s skid. The yield on the 10-year Treasury note remained at 1.69 percent. The dollar rose to 104.58 yen from 103.96 yen. The euro fell to $1.1255 from $1.1314. The British pound edged back to $1.4665 from $1.4693 after a big jump Monday.
In overseas markets Germany's DAX gained 0.5% percent, while in France, the CAC 40 was up 0.6%. The FTSE 100 was up 0.3% in Britain. In Asian markets the Nikkei 225 ended up 1.3% in Japan, while in Hong Kong, the Hang Seng gained 0.7%. The Shanghai composite index lost 0.4% in China.
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