Share markets log solid gains on expectations of ‘Remain’ win in Brexit referendum, but sterling dives on early results

By @vitthernandez on
Brexit Ballots
A workers counts ballots after polling stations closed in the Referendum on the European Union in Islington, London, Britain, June 23, 2016. Reuters/Neil Hall

Besides the Australian dollar which hit a two-month high on expectation of a “Remain” win in the Brexit referendum, the share markets also gained. However, early results with unexpected strong win of “Leave” in Sunderland caused the sterling to dive.

The Morning Bulletin reports that the NASDAQ rose 1.6 percent and the Dow Jones and S&P500 in the US increased 1.4 percent. In Europe, the FTSE100 was up 1.2 percent, the Eurostoxx gained 2 percent, the Dax grew 1.9 percent and the French CAC40 rose 2 percent.

Although exit polls were not commissioned by major political parties, results of risk-on trading in major global markets indicate the “Remain” vote would win. Bookmakers, meanwhile, gave the “Leave” vote a slim 15 to 20 percent chance of winning.

9New reports that the pound went down to US$1.4550, reversing the gains made previously that resulted in the British currency achieving a 2016 record of US$1.5033. Joe Rundle, EXT Capital head of trading, explains the dive of the sterling to the unexpected "Leave" heavy votes in Sunderland City.

He notes that at this point, markets are very nervy at the possible results of the referendum, although he adds the markets could be mistaken. “The Sunderland result has definitely altered the tone of the evening and the markets are getting choppy,” Rundle states.

The yen gained broadly, but the dollar and the euro were down at 104.70 yen and 118.87 yen from 106.875 and 122.000, respectively. Westpac senior currency strategist Robert Rennie in Sydney says the jittery market would “be the order of the day until we see final results being announced.”

First results suggested a landslide win for “Remain” in Gibraltar but Rennie says the marginal “Remain” win in Newcastle was disappointing.

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