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28/06/2016 Argonaut Morning Note

    Home Stockbroking & Research Morning Notes 28/06/2016 Argonaut Morning Note
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    28/06/2016 Argonaut Morning Note

    By admin | Morning Notes | 0 comment | 27 June, 2016 | 0

    Market Update & Important Indicators

    The rout in U.S. stocks deepened Monday as the aftershocks of the U.K.'s vote to leave the European Union rippled through financial markets. Major U.S. stock indexes that recently were approaching record highs have erased weeks of gains in the past two sessions. Questions about the impact of the U.K.'s departure added to persistent concerns about the world's economy and the ability of policy makers to stoke growth and inflation. Investors and analysts said the fallout could include lower growth, lower interest rates and a stronger dollar that could pressure exporters' profits. The only two sectors to rise in the S&P 500 were utilities and telecom, which are often used as a proxy for bonds. Investors have poured into the relative safety of such dividend-paying stocks, sending utility shares up 17% in 2016 and telecom shares up 18%.

    The Stoxx Europe 600 slid 4.1%, to its lowest close since February. The British pound fell 3.7% against the dollar to as low as $1.3121, its weakest since 1985, even after British Chancellor of the Exchequer George Osborne issued a statement reassuring investors that the U.K. economy remained resilient and its banks and financial system were healthy.. Bank shares were hard hit Monday amid concerns that the U.K.'s exit could hurt lenders operating in the region and lengthen a period of ultralow interest rates that has pressured bank profits.

    Shares in Asia rebounded Monday with Japan leading the region higher, after getting slammed by Britain's decision last week to leave the European Union. However, a move by China's central bank to weaken the yuan by the most since August last year proved unsettling, keeping investors and traders wary that the fallout from the 'Brexit' vote was far from over. The Nikkei Stock Average finished up 2.4%, recouping some of Friday's losses when the market plunged 8%. The benchmark index remains near its lowest levels since October 2014, after four straight weeks of selling. Still, as the day progressed, most major stock benchmarks pared losses. The Shanghai Composite Index finished up 1.5%, while South Korea's Kospi closed up 0.5% and 0.1%, respectively. The Hang Seng Index closed down 0.2%, after losing as much 1.4% earlier.

    Australian shares also recovered some ground Monday after being hit hard by the U.K.'s decision last week to leave the European Union. A move by China's central bank to weaken the yuan by the most since a sharp devaluation in August was largely brushed off, and the Australian currency also found tentative support. Despite beginning the day in negative territory amid ongoing uncertainty about what the outcome of U.K. referendum may mean, the S&P/ASX 200 rebounded to finish the day up 24 points, or 0.5%, at 5137.2.

    Copper futures closed up in London Monday, as firmer Asian stocks offset dollar strength in the first trading session since the “Brexit”. The London Metal Exchange's three-month copper contract was up 0.3% at $4,710 a ton at the PM kerb close, pulling back from the four-day low it hit in the previous session at $4,588 a ton. Among the other base metals, aluminium closed down 1.4% at $1,586 a ton, zinc was down 1.2% at $1,993 a ton, nickel was down 0.4% at $8,933 a ton, and lead was down 0.6 at $1,695 a ton.

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