Morning Markets: Post-vote trauma rolls on
- Eurozone: Money Supply (0800 GMT)
- US: Services PMI (1345 GMT)
Uncertainty rules in this traumatised post-Brexit world, as markets reeling from the impact of last week's shock vote try to find new assumptions for pricing equities, commodities and currencies. Friday's impact on the markets was massive: global equity markets lost $2.8 trillion on the shock UK vote. Trading in Asia was mixed today, suggesting confusion over what the post-Brexit world will look like. Shares rallied in Tokyo, but were still well below pre-Brexit levels.
Sterling traded sharply lower in the Asian session and there is as yet no indicitation of where and when that trajectory might reverse. UK stocks and European stocks are likewise expected to open in negative territory.
In the UK itself the magnitude of the exit decision continues to reverberate through the political world. The prime minister signalled his impending resignation already on Friday and this morning the chancellor of the exchequer (finance minister) said he would clarify his role in government shortly. Meanwhile, the leader of the the opposition Labour party is fighting for his political career afer a large number of his fellow MPs ressigned their shadow cabinet positions in an attempt to oust him.
The signals appearing internationally are decidedly mixed with International Monetary Fund chief Christine Lagarde urging "quick action" on Brexit and Angela Merkel, the German chancellor, calling for a more temperate approach.
- Gold soared to a two-year high on risk-on sentiment
- Global equity markets lost $2.8 trillion on Friday after Britain voted to leave the EU
- That stunning loss beat the 2008 and 1987 crashes: S&P
- Sterling added to Friday’s drop and UK stock index futures tumbled more than 3%
- The pound slipped another 2% to $1.3403 in early Asian trading
- The Norwegian krone led losses among the "oil" currencies, down 2.8% in Asian trade
- Bourses in Milan and Madrid had their worst-ever losses, down 12% plus
- China devalued the yuan the most in 10 months
- West Texas Intermediate crude fell 0.6% to $47.37/barrel
- Shares rose in a relief rally in Tokyo, but were still well below pre-Brexit levels
- The Nikkei 225 was up 2.29% at 0518 GMT at 15,294.65
- The Hang Seng was down 0.52% and the Shanghai Composite was up 1.15%
- New Zealand consumer goods imports were up $NZ152 million in May
- After a rocky start the S&P/ASX200 was up 21 points or 0.41% at 0549 GMT
- Forex traders see last Friday as the greatest single day of market mayhem ever
- GBP regained some ground after hitting a 30-year low; it was worth 1.3440 at 0010 GMT
- The US dollar was worth just ¥102.3350 at 0008 GMT
- The Australian dollar was worth 0.7434 at 0010 GMT
From the Floor
Gaps narrowing. "We see the magnitude of the move dropping dramatically," says Hardy .
Post-Brexit blues. "Expect elevated volatility over the coming days," says Garnry .
Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.
The UK vote will embolden populists into trying repeat the results in France, Germany and elsewhere. So fasten your seatbelts for a bumpy ride, says James Picerno
FX risk lesson
Last Friday, the greatest single day of forex market mayhem ever seen, shows that FX trading is a long game where risk/money management is absolutely critical, says Max McKegg
Morning Markets goes out on the TradingFloor platform at 0700 GMT, Monday to Friday.
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