Confidence in riskier assets including the pound sterling and euro continued to build up again for the second consecutive trading session today. Sterling took the worst hit in 31-years after Britain’s shocking Brexit vote.
Markets settling after Brexit
The decision revved up fears that the U.K. economy will slip into recession and can become a factor for subdued global economic growth. At the same time, political uncertainty also heightened after British Prime Minister David Cameron resigned, disappointed with the outcome of the vote. GBP/USD (GBPUSD) rose 0.43% to $1.3403 and EUR/USD (EURUSD) advanced 0.21% to $1.1087.
Equities and oil add gains
Global equities were buoyant today as they freed themselves from the Brexit fallout. Both European and Asian markets were on the path to recovery after witnessing a free fall since last Wednesday. Traders and investors have become confident that central banks will do everything in their control to prevent economies from slipping into recession, though it is unclear what else they can do with interest rates already at zero or negative. These hopes were reflective in the trading momentum of both UK and European banks, which extended gains for a second day.
Nikkei 225 (INDEXNIKKEI:NI225) gained 1.59% to 15,566.83 while Hang Seng (INDEXHANGSENG:HSI) rose 1.31% to 20,436.12. Among European indices, both FTSE 100 (INDEXFTSE:UKX) and EURONEXT 100 (INDEXEURO:N100) registered a gain of 2.53% and 2.11% to 6,295.64 and 830.35 respectively.
Oil prices pushed higher for another session taking Brent Crude up by 0.86% to $49 a barrel. West Texas Intermediate crude oil also surged 1.07% to $48.36. The rally in the commodity is driven by a higher likelihood of supply outages from Norway if 7,500 oil and gas workers decide to go on strike starting July 1. Meanwhile, a report from the U.S. Energy Information Administration is also awaited later today.