The British pound continued to slide and the yen moved higher on Wednesday amid the continuing fallout from the U.K.’s vote last month to leave the European Union.
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The British pound huddled at $1.2918 GBP=4 in early trade, having slid nearly 3 percent in the previous two sessions to carve out a 31-year trough of $1.2898.The yen was well bid as a traditional safe harbour and held at 101.10 per USA dollar JPY=, a major headache for the Bank of Japan (BOJ) as it crimps exports while suppressing much-needed inflation at home. But Hong Kong’s Hang Seng retreated 0.8%. Imports were up 2 percent through May, meaning an increase in the politically sensitive US trade deficit.
Tokyo rose 0.6 percent – marking a sixth-straight gain – Hong Kong climbed 1.3 percent in the afternoon and Shanghai added 1.9 percent by the close.
Fears of financial contagion spooked investors into the arms of government bonds, sending the benchmark 10-year Treasury yield to a record low of 1.357 percent US10YT=RR.
European markets were also set for a lower start, with financial spreadbetter CMC Markets expecting Britain’s FTSE 100 to open flat, and Germany’s DAX and France’s CAC 40 to start the day 0.3 percent lower. Japan’s Nikkei was down 0.8 pct.
MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.1 per cent, but was still within reach of its June 9 peak, having risen more than 6 per cent from its low after the Brexit vote. He calls NY home, for now.
United States crude slipped 1.2% to $48.41, eating into the 5.7% advance made over the previous week.
Fantastic Holdings plummeted 5.4 percent after announcing it would close its Le Cornu furniture business over the next six months. It has risen 11.5 per cent in the three sessions to Monday.
In the USA, the Dow dropped over 120 points in early trading but has since rebounded, shaking off the overseas losses.
New Zealand shares eked out modest gains despite weak global cues.
GBP/USD traded at 1.2971, down 0.38%, while the safe-haven yen gained with USD/JPY at 101.20, down 0.54%.
“Equity markets have been given a reprieve from this week’s selling this morning, buoyed by the dovish nature of last month’s Federal Reserve meeting minutes”, said Cantor Fitzgerald analysts in a note. It trimmed losses slightly during early European trading hours to exchange hands at $1.2939, down from $1.3023 late Tuesday in NY. Emerging market currencies floundered with South Korea’s won losing one% against the dollar, while the Indonesian rupiah shed 0.4% and the Malaysian ringgit 0.9%. The Taiwan Weighted tumbled 1.6 percent amid growing nervousness in global markets.
Yields on Australian and Japanese government bonds have also hit record lows.
In its annual policy review of the 19-country bloc, the International Monetary Fund said a further global growth slowdown could derail the euro area’s domestic demand-led recovery, and further Brexit spillovers, the refugee surge, increased security concerns and banking weakness all could take their toll on growth. Major US indices, Dow Jones, the S&P 500 and the Nasdaq are down over one percent for the period.
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The pound weakened further after the Bank of England warned on Tuesday of “challenging” risks to financial stability following the Brexit vote and eased regulatory requirements on the banking sector.
