On 23 June, 2016 – The UK voted on the ‘Brexit’ referendum
Most global markets advanced prior to the results in anticipation of a remain vote.
United States
US stocks joined the European rally and closed higher. The voting continues in the UK for about another hour. The Dow Jones industrials and S&P were up 1.3 percent while the Nasdaq added 1.6 percent. Stocks gained amid optimism that the UK would vote to remain in the European Union.
Energy companies were up with the price of oil and materials companies also climbing. Citigroup and Bank of America advanced. Macy’s advanced after it said its chief executive, Terry Lundgren, would step down early next year after about 13 years in charge. He will remain chairman of the company, and the president, Jeff Gennette, was named to become chief executive. Mosaic was up on reports that the large potash companies of Russia and Belarus might start working together, something that haven’t done since 2013. Other mining and chemicals companies also advanced. Copper miner Freeport-McMoRan and PPG Industries rallied. Software company Twilio surged after it went public in an offering that raised $150 million. Red Hat was down after it posted mixed quarterly results and a disappointing outlook. The company also said it would buy the software maker 3scale but did not disclose terms. Barnes & Noble gained after it reported stronger-than-expected sales.
Weekly jobless claims were down a greater than anticipated 18,000 to 259,000.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$2.70 to US$1,262.15. Copper futures were up 1.3 percent to US$2.16. WTI spot crude was up 96 US cents to US$50.09. Dated Brent spot crude was up US$1.03 to US$50.91. The US dollar was down against the euro, pound, and the Canadian and Australian dollars. However, it advanced against the yen and was virtually unchanged against the Swiss franc. The Dollar Index was down 0.1 percent. The yield on US Treasury 30 year bond was up 5 basis points to 2.55 percent while the yield on the 10 year note was up 6 basis points to 1.74 percent.
Europe
Stocks rallied as Britain went to the polls to vote on a referendum on whether the UK would remain a part of the European Union. Polls prior to the vote suggested that the “Remain” campaign had taken the lead. Voting got underway at 7 a.m. London time and the final results will be available on Friday. Investor optimism drove the pound sterling to a 2016 high. The FTSE added 1.2 percent, the CAC was up 2.0 percent, the DAX gained 1.8 percent and the SMI climbed 0.6 percent.
Banks including Société Générale, Crédit Agricole, BNP Paribas, Commerzbank and Deutsche Bank advanced. ThyssenKrupp and Salzgitter were higher. Automakers Volkswagen, BMW, Daimler, Peugeot and Renault gained. In London, Royal Bank of Scotland Group was up on reports it has received bids for its Greek ship finance business. Standard Chartered, Lloyds Banking Group and Barclays also climbed. Supermarket chain Tesco was up after reporting a second consecutive quarter of higher sales. Mining stocks advanced thanks to rising copper prices. Antofagasta, Anglo American, Glencore and BHP Billiton gained.
Flash June Eurozone composite PMI reading was 52.8, down from 53.1 in May. Germany’s composite PMI slid to 54.1 from 54.5 in May. In France, the composite PMI declined to a four month low of 49.4, down from 50.9 in May.
Asia Pacific
Stocks were mixed as investors waited for the outcome of Britain’s referendum on its EU membership. Polling stations across the UK opened at 7 AM local time, with a record-setting 46.5 million people registered to cast their ballot by 10 PM.
The Shanghai Composite was down 0.5 percent while the Hang Seng added 0.4 percent.
The Nikkei climbed 1.1 percent thanks to a weaker yen and on optimism the ‘Remain’ campaign is set for a comfortable victory in the EU referendum. Sharp gained on a Nikkei report that it plans to start shipping organic light-emitting diode panels in 2017. SoftBank Group was up after the mobile carrier appointed Ken Miyauchi as its Representative director, president and chief operating officer. Sony gained after reaching an agreement to settle a lawsuit over the PlayStation 3’s Linux functionality. Japan’s June flash manufacturing PMI continued to deteriorate, virtually unchanged from May. The reading was 47.8 after 47.7 in May.
Both the S&P/ASX and All Ordinaries added 0.2 percent. Fortescue Mining rallied after saying it would continue to repay debt to reduce interest expenses. BHP Billiton and Rio Tinto advanced after iron ore prices rose overnight. Gold miners Evolution Mining, Newcrest, Regis Resources and Norther Star Resources climbed even as gold hovered near two-week lows. Banks ended flat to slightly lower while energy stocks were higher.
The Kospi retreated 0.3 percent as Britons began casting their ballots. The Sensex added 0.9 percent with sentiment supported by a rally in European markets and gains in the rupee after two new polls suggested the Remain campaign had taken the lead in Britain’s referendum on EU membership.
Global Stock Markets
Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.
Looking forward*
France reports final first quarter gross domestic product. Germany’s Ifo survey for June will be released. In the US, May durable goods orders and June final consumer sentiment will be reported.
Source: Fidelity
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