(Boursier.com) – The anxiety in the financial markets will increase as we approach the referendum on the UK Brexit planned next Thursday. On Wall Street, investors expect more volatility and high volumes of transactions. Friday’s session will be particularly at risk, following the announcement of the result of the British referendum
Once is not custom. Wall Street will evolve in the coming days according to European markets by themselves prey to turmoil for weeks in fear of a victory for supporters Brexit June 23 The implications of an exit from the United Kingdom to the European Union would be very significant effect on financial markets, to the extent that London is the world’s largest financial center with Wall Street.
In short run camp a victory of “out” Thursday entail brutal arbitrations and turbulence on equity as the currency and bond markets. We also witness a fall in sterling and the euro, and to a rise in the dollar, the Swiss franc and the yen, considered safe havens. The rates tend on British government bonds, as well as peripheral European countries titles, which suffer from a fear of political weakening of Europe after the UK.
in case of victory of the “in” on the other hand, markets should report their relief by higher stocks, sterling and euro. bond side, the German rate, which had fallen into negative territory last week in fear of a Brexit should regain height.
An outbreak of volatility on Wall Street since the end of May
on Wall Street, the Dow Jones was down 6 the last seven sessions. Friday, it sold 0.33% to 17,675 points falling by 1% on the week, while the index broad S & amp; P 500 finished at 2,071 dots (-0.33% Friday and 1.2% in 5 sessions). The Nasdaq Composite, rich in values ”techie” and “biotech” Friday fell 0.92% to 4,800 points, fell 1.9% on the week.
The volatility, as measured by VIX index has soared 48% since May 27, when polls began to show a possible victory of Brexit. The VIX was trading at 19.26 Friday night, after passing over 20 in the week. He returned the highest since late February, when market turbulence related to the slowdown in the Chinese economy.
In Europe, the EuroStoxx 50 index lost 2.1% last week, and gave up nearly 8% since early June on fears of a Brexit. In the UK, the referendum campaign June 23 was suspended from Thursday to Sunday, after the assassination of the Labour MP Jo Cox favor of maintaining the UK in the European Union.
in the UK, the latest polls show a camp ascent of the “in”
Before this drama, polls showed a lead of more and wider the proponents of an output of the United Kingdom of the European Union, but some analysts believe that the murder of Ms Cox by a man linked to the extreme right could discredit the pro-camp Brexit and generate a burst of maintaining supporters in EU.
on Sunday, three new polls have pointed to a rise of camp “Bremain” (of Britain and “remain” stay). The first, conducted by the Institute for Survation ‘Mail on Sunday’ camp up the “In” leads with 45% of votes against 42% for the “Out”. The previous Survation poll gave the opposite result. The second survey, conducted by Yougov for the Sunday Times, also gave a narrow victory to the “In” at 44% against 43% for the “Out”.
A third Opinium poll published Saturday evening to the newspaper ‘the Observer’ gave the score at camps, with 44%. Note that the number of undecided (which will make the difference on election day) remains high, which makes the outcome of the undecided vote and probably tight …
Analysts estimate that if Brexit, US markets will be less strongly affected than European markets. However, in a global context already sluggish economy and fragile, a Brexit would be an additional risk factor because it would cause a sharp slowdown in UK growth, the 5th largest economy.
The Fed fears that Brexit affects the US economy and world financial markets
So the Federal Reserve has given June 15 to raise interest rates, citing in particular the risk of Brexit. Janet Yellen, president of the Fed has been very moderate in his comments and felt that Brexit “could have implications for the economic outlook in the United States.” June 6 already, Yellen spoke of “significant impact” on the economy if Brexit, and considered that such a vote would negatively affect the sentiment of financial markets, by reducing appetite of investors’ risk.
on Wall Street, the maturity of the British referendum will coincide with the annual reshuffle of the average values indexes Russell 2000 and Russell 1000. They must adjust their composition on Thursday, the same day of the British election. The event brings every year many trade-offs from the index fund managers, but this time, these arbitrations may reinforce volatility room …