There is grave uncertainty about whether British voters will choose to leave the European Union in a June 23 referendum.
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On June 6 Yellen called the poor jobs report “concerning” and said she was focused as well on an apparent downturn in inflation expectations, which could hold back any upward pressure on real prices.
Analysts say members of the Federal Open Market Committee led by Fed Chair Janet Yellen still want to push ahead on normalizing USA monetary policy with higher interest rates.
The yen also remained on the front foot against the dollar, although the US currency drew a bit of a reprieve on Tuesday’s upbeat May US retail sales data. Traders were also awaiting the outcome of the two-day policy-rate meeting of the Federal Reserve Board, which ends Wednesday.
Investors’ lack of confidence that the Fed will raise rates could be seen in bonds and the USA dollar. The yield on the 10-year Treasury note was 1.62 percent, up slightly from a day earlier.
“The likelihood of the Fed hiking interest rates will be very low while Brexit worries dominate action in the financial markets”, said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.
Highlighting the grave concerns of investors over the possibility of a vote to exit the European Union, called as “Brexit”, instability in the British pound reached its maximum in around 20 years, surpassing the heights seen when Lehman Brothers, US investment bank, bankrupted in 2008 economic crisis.
Shares of Microsoft MSFT.O fell 2.6 percent after the company announced it would buy online networking company LinkedIn LNKD.N for $26.2 billion in its biggest-ever deal.
Germany’s top stock market the DAX and France’s CAC 40 have more than seven per cent of their value over the past five days.
Twitter shares jumped as well, up 53 cents, or 4 percent, to $14.55 on speculation that LinkedIn’s buyout could mean better buyout prospects for that social media service. Blue Coat had plans to go public later this year.
In currencies, the dollar fell to 106.21 yen from 106.79 yen. Brent crude, used to price global oils, fell 66 cents to $49.69 per barrel in London.
ENERGY: Benchmark U.S. crude dropped 66 cents to $48.22 per barrel in electronic trading on the New York Mercantile Exchange after the International Energy Agency said that prices were unlikely to rise significantly in the future due to large inventories and production increases. While several politicians, economists, and financial chiefs have attempted to deter voters from voting to split from the European Union in recent months, new warnings in recent days have cast aspersions on the UK’s ability to go it alone economically.
Stocks fell 3.5% in Japan, 2.5% in Hong Kong, 2% in Europe and 1.2% in the United Kingdom.
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METALS: Gold rose $1.20 to $1,288.10 an ounce, silver fell 2 cents to $17.42 an ounce and copper fell 1 cent to $2.04 a pound.
