Global stocks surge as Brexit jitters subside

London, June 29 

European and Asian stock markets built on a recovery from the shattering aftermath of last week’s Brexit vote on Wednesday as investors wagered central banks would ultimately ride to the rescue with more stimulus.

The UK and European banks, a centre of concern since Britain shocked global financial markets on Friday by voting to leave the European Union, were broadly higher, extending a recovery from two days of trading which knocked almost 40% off Barclays and RBS.

Sterling and the euro, the other big victims on Friday and Monday, gained around 0.4% respectively against the dollar. That put the pound 2 cents off Monday’s 31-year low after falling some 18 cents from Thursday night.

Stock markets in Frankfurt, Paris and London all gained more than 1.5% in early deals while the pan-European index of major banks was up 3%.

Traders say the better mood was part the result of a swing in expectations towards easier monetary policy over the next six months, and part hopes that Britain will remain closely integrated with Europe whatever deal is done.

“Expect lots of mood swings ahead as the prevailing mood changes but there was definitely an air that full Brexit wasn’t necessarily a done deal yesterday,” Deutsche Bank analyst Jim Reid said in a morning note.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1% to recoup around one-third of Friday’s stinging loss. Japan’s Nikkei climbed 1.6%, while Australian stocks added 0.8%.

“The only certainty in Europe is uncertainty,” analysts at ANZ said in a note.

“European leaders appear to want to move forward with Brexit plans as quickly as possible, but political turmoil within Britain suggests a quick turnaround is unlikely,” they wrote.

Sterling, down as much as 9% in trade-weighted terms on Monday compared to before the vote results, stood at $1.3397, compared to the 31-year low of $1.3122. The euro rose to $1.1064, while the dollar steadied at 102.33 yen.

Japanese Prime Minister Shinzo Abe also urged the Bank of Japan to provide ample funds to markets.

In commodity markets, gold was firmer around $1,321.00 an ounce, off a low of $1,305.23 touched Tuesday.

Oil prices gained as a looming strike by Norwegian oil and gas field workers threatened to cut output. There were also reports oil producers and refiners in crisis-struck Venezuela were struggling to keep output up. — Reuters