The Federal Reserve’s decision yesterday to stay put on interest rates, followed by similar moves from the Bank of Japan and the Swiss National Bank has led to unrest in equity markets across the globe. Both Asian and European markets recorded weak sessions with U.S. stock futures echoing the same outlook.
U.S. Futures extend losses
During pre-market hours, S&P 500 INDEX (INDEXCBOE:SPX) Futures slid 0.29% to 2,057.50 and NASDAQ (INDEXNASDAQ:NDX) Futures lost 0.37% to 4,389.38. Like the Fed, both the Bank of Japan and the Swiss National Bank cited a global economic slowdown and uncertainty surrounding Brexit as factors to keep rates unchanged. Central banks have reiterated that if Britain exits the European Union, it will create a ripple effect in global financial conditions as well.
Traders have now turned to the Bank of England, which will announce its policy stance later today. The BoE is also likely to avoid announcing any changes to rates and is expected to discuss the impact of a Brexit vote.
Economists warn on Brexit consequences
Meanwhile, a growing number of voters favoring Brexit has upset some economists, who have warned that such a decision could lead to turmoil big enough to disrupt global financial markets. An Ipsos MORI poll showed that 53% of Britons want Britain to leave the European Union.
In commodities, mixed data on oil forced the commodity to extend losses for the fifth straight session. U.S. Energy Information Administration released data that showed U.S. crude stockpiles declined by just 933,000 barrels last week, lower than estimates of 2.3 million barrel decrease projected by analysts. Goldman Sachs (NYSE:GS) also once again turned bearish for the commodity stating that oil prices stand slim chances of reclaiming 2016 highs for months to come.
Meanwhile, series of disappointing events across the world increased investors’ risk appetite for safe assets, resulting in an upswing in SPDR Gold Trust (ETF) (NYSEARCA:GLD) prices that marched up to two-year highs during today’s premarket session.