Brexit fear factor sends global stocks spinning

London, June 13 

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Fears that Britain may be on the verge of voting to leave the European Union next week coursed through global financial markets on Monday, sending Asian and European shares sharply lower and the pound to an eight-week low.

With growth looking shaky, worries that the “Brexit” vote could tip Europe back into recession have moved to the head of a list of concerns for investors which includes banks’ problems with negative interest rates and dangerous imbalances in China.

A poll late on Friday gave Britain’s “Leave” camp a 10-point lead, knocking sterling back by almost 3 full cents against the dollar and driving the worst losses for Asian stock markets in four months. European shares fell 1.5 per cent and Wall Street was set to open 0.3 per cent lower.  Other polls have been tighter, but money markets have now abandoned expectations, high just weeks ago, that the US.

Federal Reserve could raise official borrowing costs on Wednesday, just 8 days before the UK vote. Instead, the worry is that the Fed could use language that quells expectations of a move this year at all.

More broadly, after eight years of ultra-low rates and outright money-printing, investors wonder if central banks have much ammunition left should the uncertainty that a Brexit would bring for thousands of businesses weaken demand and investment further.  “We’re in uncharted territory in front of the Brexit vote, and then there’s also the Fed this week. So the wall of worry is quite high at the moment,” said Zeg Choudhry, managing director at LONTRAD. “All banks are a little bit lower, and they’re the ones which are likely to get hit.”— Reuters