Global Stocks Plunge; US Futures, Oil Slide As Brexit Fears "Jolt Markets"
By Tyler Durden
Just last week we were commenting on the unprecedented level of complacency ahead of a plethora of June event catalysts, key among which the June 23 Brexit referendum vote. And then everything changed over the past few days, when the Leave camp was seen making dramatic gains in the polls, culminating with yesterday’s Opinium poll that has “Brexit” leading by a remarkable 19 points. That, and of course the 4 central bank meetings on deck, each of which has the capacity to shock and disappoint the markets if one of the world’s central banks says something that markets disagree with.
But right now it is all about the immediate fate of the UK, and as Bloomberg explains the “jolted markets” and overnight plunge in global risk assets, “growing anxiety over the prospect of the U.K. exiting the European Union dominated financial markets, sending global stocks down for a third day and the British pound to an eight-week low while boosting demand for havens such as the yen and gold.”
“There are many uncertainties, so we could continue seeing declines and touch new lows in the days to come,” said John Plassard, a senior equity-sales trader at Mirabaud Securities in Geneva. “Even though nobody is expecting a rate hike, everyone will look at what Yellen will say at the press conference, and we are 10 days from the Brexit vote, and also days away from the election in Spain, while oil is lower and volatility is the highest in months.”
As we showed last night, the number of hedge fund net short position on cable is the highest since the summer of 2013, which of course means that should the vote go against the “Leave” camp, the short squeeze will be nothing short of spectacular.
Meanwhile, Asia was ugly, with the Yen soaring to its May highs (and the all important USDJPY carry trade plunging as a result) while Asian stocks slumped between 2%-3.5% as investors dumped risk assets ahead of UK’s referendum. The surge in the Yen slammed Japan, and the Nikkei was down a whopping 3.5%, just north of 16,000 as concerns about Kuroda’s (and Abe’s) professional career and tenure mount. China’s Shanghai Composite tumbled the most since February, dropping 3.2%, which is hardly the move those expecting a surge on a potential inlusion of China in the MSCI Index were hoping for.
But the worst was in Europe, where equities headed for the lowest close since February and the pound weakened against all of its 16 major peers after polls showed the outcome of a referendum on whether Britain will stay in the EU was too close to call. The yen rose toward its strongest level since 2014, while the cost of insuring corporate debt against default increased to the highest in more than two months. Oil retreated after a report showed a jump in U.S. drilling rigs, while massively bullish positioning by spec investors threatens a wipeout if and when the selling begins.
And since this “market” …read more
Source: Global Stocks Plunge; US Futures, Oil Slide As Brexit Fears "Jolt Markets"
