London:
Global stocks rose today, with the London market now in a much better place than before Britain’s vote to leave the EU, and others firmly on road to recovery.
Asian stocks led the way, ending the week with another rally on optimism that central banks globally will step up to support growth in the face of uncertainty caused by Britain’s vote. Wall Street was slightly firmer in early New York business.
After the shock of the referendum result sent world markets into initial free fall last Friday, they have surged over the past week as authorities moved to soothe concerns another rout was imminent.
“The FTSE 100 looks on course to post its best week since 2011,” said Michael Hewson at CMC Markets.
In mid-afternoon, the benchmark London index stood 0.6 per cent higher at 6,543.99. This compares with its 6,338.10 on June 23, its last level before the British result was published.
The Paris and Frankfurt stock markets were also higher, but remained below their pre-Brexit vote highs.
Yesterday, Bank of England boss Mark Carney became the latest to provide assurances, indicating policymakers could embark on fresh monetary easing—raising the possibility of a cut in rates.
Carney, who had urged Britain to vote to stay in the EU, said “the economic outlook has deteriorated and some monetary policy easing will likely be required over the summer”, although he said there were limits to what the bank could do.
His comments sent the pound tumbling yesterday, but provided the equity market with what Hewson called a “Carney bounce”.
Today, sterling was steady against the dollar, while the euro clawed back some of the week’s losses against the US currency.
Analysts warned that although the initial Brexit fear factor has subsided, markets are still on edge.
“The Brexit shock wave is not totally digested yet and the uncertainty into which markets have been thrown remains a great source of worry for coming weeks and even months,” economists at Saxo Banque in Paris said.
Today, Tokyo ended 0.7 per cent higher despite data showing weak confidence among Japanese businesses, while consumer prices dropped for a third straight month in June. Sydney added 0.3 per cent and Seoul 0.9 per cent. Shanghai climbed 0.1 per cent, with dealers unmoved by figures showing China’s manufacturing sector contracted last month.
