USA stocks are trading higher Wednesday afternoon as drug and consumer companies lead the way.
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Yield on the benchmark USA 10-year government bonds fell to its lowest level in history in the aftermath of the Brexit vote this week. The market is coming off its best week since November, and USA markets were closed Monday for the Independence Day holiday.
Global markets plunged again on fears of economic instability in the wake of Britain’s vote to exit the European Union, with some United Kingdom banks reporting runs on their investment funds.
The Bank of England warned that the economic risks of “Brexit” had begun to “crystallize” and announced an easing of bank rules to promote lending to consumers and businesses.
Asian stock markets slumped on Wednesday led by a 3-percent fall in Tokyo stocks while the British pound hit a new 31-year low.
Government bond yields around the globe fell, with Swiss yields negative all the way out to 50 years and British, German and Japanese 10-year yields at or near their lowest on record. Lower bond yields translate to lower interest rates, and that hurts bank profits on loans such as mortgages.
OVERSEAS: Britain’s FTSE 100 fell 1.5 percent while France’s CAC and Germany’s DAX both lost 2 percent. Halliburton shed $2.03, or 4.5 percent, to $43.53 and ConocoPhillips gave up $1.81, or 4.2 percent, to $41.70. Benchmark U.S. crude picked up 83 cents, or 1.8 percent, to $47.43 a barrel in NY. Brent crude, used to price worldwide oils, fell $2.43, or 4.9 percent, to $47.63 a barrel in London. That pulled energy companies lower.
MSCI’s gauge of global stocks, which tracks markets in 45 countries, dropped by just under 1.0 percent. Considered a safe investment, they are the best-performing sector on the S&P 500 over the last month, and AT&T and Verizon are both trading at long-time highs.
Sterling suffered, falling more than 1.5 percent to a low of $1.3051, its lowest since 1985. Gold is at its highest price in more than two years and silver is the highest it’s been since August 2014.
Overnight the price of precious and base metals hit multi-month highs before giving up gains as traders bet on more stimulus.
HERE WE GO AGAIN: Stocks took a steep two-day plunge last month after Britain voted to leave the EU. Tuesday’s skid shows investors haven’t put all of their worries behind them.
WALL STREET: U.S. stocks closed lower on Tuesday a day after the Independence Day holiday.
The price of wholesale gasoline remained at $1.43 a gallon, and companies that refine oil into gas stumbled.
The Dow Jones industrial average fell 83 points, or 0.5 percent, to 17,757. Hong Kong’s Hang Seng index slid 1.2 percent.
Last week’s rally was also fed by fading concerns that the exit of Britain from the European Union will have a major negative impact on the global economy.
“A further slowing, and possible contraction (of UK economy), looks highly likely in coming months as a result of the uncertainty created by the European Union referendum”, said Chris Williamson, chief economist at Markit, which compiles the UK PMI survey.
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The flow of money into U.S. Treasurys has also served to raise the value of the dollar against other currencies. The euro dipped to $1.1062 from $1.1075.
