Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


While you were sleeping: Stocks, pound rebound

While you were sleeping: Stocks, pound rebound

June 29 (BusinessDesk) - Equities on both sides of the Atlantic rose as investors picked up some bargains following a two-day Brexit-inspired rout amid expectations that central banks will follow through on their promise to help if needed.

Europe’s Stoxx 600 Index finished the day with an advance of 2.6 percent from the previous close. Germany’s DAX index rose 1.9 percent, the UK’s FTSE 100 index rallied 2.6 percent, while France’s CAC 40 index also added 2.6 percent.

“Stocks are rebounding on the expectation that there will be a coordinated intervention by central banks,” John Plassard, a senior equity-sales trader at Mirabaud Securities in Geneva, told Bloomberg. “What central banks can do is put confidence back in the market by telling everyone that they are here and ready to act. If we don’t get that sort of support, we’ll see further declines.”

Wall Street also rose. In 2.49pm New York trading, the Dow Jones Industrial Average gained 1.1 percent, while the Nasdaq Composite Index rallied 1.8 percent. In 2.34pm trading, the Standard & Poor’s 500 Index climbed 1.2 percent.

"This is a very volatile and churning environment," Eric Wiegand, senior portfolio manager at US Bank in New York, told Reuters. "It's not going to be the blank summer months that we had grown accustomed to."

Gains in shares of Travelers Cos and those of JPMorgan Chase, up 2.9 percent and 2.2 percent recently, propelled the Dow higher. Shares of DuPont dropped, posting the largest percentage decline in the Dow in afternoon trading with a slide of 3.4 percent.

Meanwhile, the latest US economic data showed gross domestic product grew at a 1.1 percent annual pace in the first quarter, exceeding the previously reported 0.8 percent increase. Even so, concern about Brexit and its impact on financial markets and the global economy might weigh on consumers, some analysts said.

"The test comes in the next few months as the turbulence in financial markets may affect consumers' behaviour and also weigh on business investment," Ryan Sweet, senior economist at Moody's Analytics in West Chester, Pennsylvania, told Reuters. "If financial markets settle down, the effect of the British referendum on the US economy will be very small."

The British pound rose, rebounding from the lowest level in more than three decades, gaining for the first time since last week’s referendum but the outlook remains murky at best.

“I wouldn’t put too much weight on this move—we’re in uncharted territory now,” Rob Carnell, chief international economist at ING Bank, told the Wall Street Journal. Carnell sees the pound falling to US$1.25 due to the continued post-Brexit uncertainty. “I wouldn’t be going out and filling my boots with sterling,” he said.

In an auction aimed to boost liquidity, the Bank of England allotted 3.072 billion pounds to the nation’s lenders, after having received bids totalling 6.3 billion pounds.

“It’s becoming more competitive for liquidity and we can see that there are some modest signs of stress outside of the equity prices, where there are much clearer signs of stress,” Philip Rush, an economist at Nomura International, told Bloomberg. “This is a higher call for liquidity than the banking system has asked for for a long time, but 3 billion pounds in the grand scheme of things is relatively low. It could have been a lot worse.”


© Scoop Media

Business Headlines | Sci-Tech Headlines


Skodafone Goneski: Sky TV, Vodafone Drop $3.44 Billion Merger Plan

Sky Network Television and Vodafone New Zealand have terminated their merger agreement which aimed to create the country's largest telecommunications and media group, and have withdrawn an appeal against the Commerce Commission's rejection of the plan. More>>

Quake Insurance: Reforms To EQC Act Announced

· Increasing the monetary cap from $100,000 (plus GST) to $150,000 (plus GST) for EQC building cover.
· Clarifying EQC land cover is for natural disaster damage that directly affects the insured residence or access to it... More>>


Reserve Bank: Official Cash Rate Unchanged At 1.75 Percent

Global economic growth has increased and become more broad-based. However, major challenges remain with on-going surplus capacity and extensive political uncertainty... More>>

Kaikōura Earthquake: Private Insurers Receive $1.8b Claims

Insurance Council Chief Executive Tim Grafton said most is for commercial loss at $1.36 billion, with residential claims amounting to over $460 million. “...We have a high level of confidence that most people will have received settlement offers by the end of this year." More>>


Forms And Data: New Proposals To Simplify Personal Income Tax

The Government is proposing to make tax simpler for individuals, with people whose only income is from a salary, wages or investments no longer being required to file tax returns to receive tax refunds or to calculate any additional tax. More>>