U.S. Stocks Extend Losses Post Brexit

U.S. Stocks Extend Losses Post Brexit

U.S. stock futures are indicating a lower opening for U.S. markets today as global stocks continue to react to Britain’s decision to leave the European Union. S&P 500 INDEX (INDEXCBOE:SPX) Futures dipped 0.64% to 2,005.50 and NASDAQ (INDEXNASDAQ:NDX) Futures plummeted 0.82% to 4,227.38.

Pound breaks 31-year low

GBP/USD experienced a steep sell-off this morning that knocked it down below 31-year lows once again. Brexit prompted both Bank of America Corp. (NYSE:BAC) and Goldman Sachs Group Inc. (NYSE:GS) to trim their forecasts for the Pound . Athanasios Vamvakidis, FX strategist at BAML, did not rule out that Sterling could hit below $1.30. Meanwhile, British Chancellor of the Exchequer George Osborne said that Britain’s economy may readjust following the Brexit fallout.

Sentiment across global markets was feeble as investors preferred to take the risk-off trade. Demand for safe haven assets such as yen and gold was prevalent. Asian indices finished the day mixed, finding some encouragement from Central Banks’ pledge to support markets. However, European shares plummeted, led by bank and travel stocks.

Gold gains and oil steadies 

The diminished risk appetite helped gold to extend gains for another day. Bullion hovered near 2-year highs while some analysts project its run-up to $1,400 an ounce in the near term. Gold had registered its biggest single-day gain since September 2013 on Friday after it breached $1,358.20. The metal is now trading at $1,330.

Oil gained earlier in the morning but has since retreated, stabilizing post Brexit. The outlook for the commodity improved after a number of analysts projected a negligible impact of Brexit on overall global oil demand. Taking the Brexit focus off from oil, analysts view demand in China and global oil supplies as bigger factors influencing the commodity. At the same time, a report from Baker Hughes Incorporated (NYSE:BHI) indicating that the drilling rig count dipped in the U.S. last week also lent support to the oil outlook.