The much-awaited UK referendum vote regarding staying or leaving the European Union began today and kept equities, oil and the British pound higher yet anxious. Global equities were broadly higher even as recent opinion polls showed a close call between the ‘Remain’ and ‘Leave’ campaigns.
Traders, investors, and corporations across markets are all geared up to face volatility that may accompany the decision. As Britons decide the future of their country, stock futures in the U.S. suggested a higher opening for the day. S&P 500 INDEX (INDEXCBOE:SPX) Futures edged higher by nearly 1% to 2,097.38 while NASDAQ (INDEXNASDAQ:NDX) Futures rose 1.10% to 4,443.
Apart from the Brexit vote, key economic indicators that might leave an impact on markets included Eurozone business growth among others. As per official reports, growth in the Eurozone declined at a far greater pace than expected. Composite Purchasing Managers’ Index (PMI) fell to 52.8 in June from 53.1 in May to 17-month low. Meanwhile, growth in the German private sector also eased during the last month. Markit’s flash composite PMI that tracks services and manufacturing activity reported a drop to 54.1 in June from 54.5 in May. Alongside these, markets will also stay tuned to several important economic events to be released in U.S., including jobless claims.
S&P warns about downgrade
In currencies, the pound retreated from six-month highs following the commencement of the referendum. Sentiment for Sterling improved after opinion polls showed the Remain campaign gaining momentum over Leave. However, Standard and Poor’s warning that Britain might see a rating downgrade forced traders to remain cautious.
Trading in gold was volatile leading up to the UK vote. However, analysts expect bigger movement in bullion following the outcome of vote. A decision to leave the EU could translate into big gains in gold and vice versa if the country votes to remain. Meanwhile, oil prices rose further, shrugging off disappointing reports by the U.S. Energy Information Administration (EIA).