Market Update & Important Indicators
U.S. Stocks soared at the start of the week after polls suggested the U.K. was more likely to vote to remain in the European Union in Thursday's referendum than previously expected. Some investors indicated relief at the polls was propelling a gain in riskier assets as investors sold government bonds, gold and other havens. Monday's gains put the Dow industrials on track to erase last week's 1.1% fall, the index's biggest decline in more than a month. The prospect of a U.K. exit from the EU had sent stocks around the world tumbling in recent sessions, while bond yields dropped to record lows as investors feared the move would spark a prolonged period of uncertainty and deal a blow to growth and trade in the world's fifth-largest economy.
The Stoxx Europe 600 jumped 3.6%, its largest gain since August, while the British pound surged 2.3% against the dollar to $1.4692. Those gains came after a survey published in the Mail on Sunday showed that 45% of respondents backed the U.K. staying in the trade bloc. The Euro Stoxx 50 Volatility index has recently surged to a one-year high, while investors have pulled money out of European equity funds for 19 consecutive weeks, according to data from EPFR Global.
A sharp rebound in Japanese stocks helped lead most Asian markets higher Monday, as worries eased about the coming referendum in the U.K. on European Union membership. The Nikkei Stock Average finished up 2.3%, following a 6% drop last week. The S&P BSE Sensex closed up 0.7%, erasing earlier losses as technology and auto shares gained. Elsewhere, Hong Kong's Hang Seng Index added 1.7%, South Korea's Kospi was up 1.4% and the Shanghai Composite Index recovered losses earlier to gain 0.1%. Yields on several benchmark Asian government bonds rose Monday, suggesting investors were no longer ducking for cover. Yields on the 10-year Japanese government bond were at minus 0.143%, compared with a record low last Thursday of minus 0.202%
A rebound in oil prices and eased concerns about the U.K.'s coming vote on European Union membership helped drive the biggest jump by Australian shares in seven weeks Monday. Markets around the world have been held back in recent sessions by renewed worries about global growth and fears that markets will be roiled if Britons vote to exit from the EU in Thursday's referendum. Crude oil pushed higher after snapping a six-day losing streak Friday. Rising for a second straight session, the S&P/ASX 200 climbed 94.1 points, or 1.8%, to finish at the day's high of 5256.8. That marked the sharpest rise since May 3. The basket of energy stocks led broad gains, rising 5.4%, while the financials and materials sectors each advanced 2.3%.
Copper closed higher in London Monday, with greater investor risk appetite and a softer dollar attracting demand. The London Metal Exchange's three-month copper contract was up 2% at $4,644 a ton at the end of open-outcry trading, having hit a three-day high earlier in the session at $4,650 a ton. Among the other base metals, aluminium closed up 1% at $1,624 a ton, zinc was up 1.5% at $2,001 a ton, nickel was up 2.4% at $9,239 a ton, and lead was up 1.7% at $1,715 a ton.
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