Stocks, sterling fight back after Brexit beating

Wednesday, 29 June 2016 00:00 - - {{hitsCtrl.values.hits}}

NEW YORK (Reuters): Stocks rose worldwide for the first time in three days and sterling and the euro climbed on Tuesday as investors made a rush for Brexit-bashed assets.

Bargain-hunting prevailed, but there was still widespread uncertainty over Britain’s vote to leave the European Union as the bloc’s leaders, including soon-to-be-ex UK Prime Minister David Cameron, held their first post-vote meeting in Brussels.

European shares were up 2.3%, clawing back some of their 10% loss the wake of the UK’s vote in favor of Brexit on Friday.

Wall Street shares also bounced back, with banking shares recovering some of what they had lost. The S&P financial index rose more than 1.55%.

The Dow Jones industrial average rose 138.5 points, or 0.81%, to 17,278.74, the S&P 500 gained 20.29 points, or 1.01%, to 2,020.83 and the Nasdaq Composite added 67.55 points, or 1.47%, to 4,661.99.

Britain’s Lloyds and Barclays jumped 6.8% and 4% respectively. Italy’s UniCredit was up 3% and Spain’s Bankia surged 8.89%.

Sterling also got a reprieve. Last up 1.1% against the greenback at $1.3371, it regained some ground after hitting a 31-year low of $1.3122 on Monday. The euro was last up 0.4% against the dollar at $1.1068 after hitting a 3-1/2 month low of $1.0909 on Friday.

Against the yen, sterling rose 1.55% to 136.85.

“After a few days of a lot of volatility, it looks like we have found some stability,” said TD Securities’ European Head of Currency Strategy Ned Rumpeltin.

Even so, the lack of clarity over how A British exit from the EU will proceed could fuel volatility in the weeks to come.

“I think this is a short-lived rally,” said Kingsview Asset Management portfolio manager Paul Nolte.

The major concern for investors - aside from the political ramifications of a split - is whether already struggling banks can survive if Brexit prompts central banks in Europe, Switzerland, Scandinavia and Japan to cut interest rates even more deeply into negative territory.

Safe-haven assets gold and U.S. Treasuries stepped back after two heady days. Spot gold fell 1% at $1,311.61 an ounce at 1355 GMT on Tuesday.

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