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British support to exit European Union forces fall in World stocks

World stock markets mostly fell Thursday as new polls showed a rise in British support for exiting the European Union, adding to concerns over the economic outlook.

Investors rushed for haven investments like the yen and gold, seeking financial protection in case Britons vote to leave the Eu in the June 23 referendum.

Europe’s main stock markets ended down between 0.3 percent and 0.6 percent after two new polls showed support for Brexit ahead of the pro-EU camp just one week before the vote.

US stocks also started in negative territory, but then rallied in a move that analysts viewed as unsurprising after five straight days of declines. The S&P 500 finished up 0.3 percent.

In Asia the yen soared to a 22-month high against the dollar and Tokyo stocks slumped 3.2 percent as the Bank of Japan failed to pump up its stimulus.

Gold meanwhile hit a near two-year high before retreating, while oil prices dropped.

The Brexit vote is worrisome because of unknowns such as how exactly Britainwould extricate itself from the EU and the possibility that an exit could spur other countries to leave, said Art Hogan, chief market strategist at Wunderlich Securities.

“The disruption is a credible fear because the magnitude of the unknown is in itself disturbing,” Hogan said.

“We’re far from having priced in a worst-case scenario yet.”

Analysts said investors were also unnerved by status-quo policy decisions by the US Federal Reserve, the Bank of Japan and Bank of England.

On Wednesday the Federal Reserve left interest rates unchange citing in part worries over Brexit.

“There was a time not all that long ago when this flush of dovishness would have sent equity markets skyward,” said analyst Patrick O’Hare.

“Now, they simply appear grounded by the belief that monetary policy has been ineffectual in producing escape velocity and that the central bankers haven’t a good clue what to do about it at this juncture.”

Thursday also saw the Bank of England leave its main interest rate at 0.5 percent, while the Bank of Japan maintained the amount of its cash stimulus pumping around the economy.

“The outcome of the referendum continues to be the largest immediate risk facing UK financial markets, and possibly also global financial markets,” read minutes from the BoE’s June meeting, which added that “were the UK to vote to leave the EU, sterling’s exchange rate would fall further, perhaps sharply.”


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