Global stocks, sterling surge as Brexit momentum weakens in polls

Mon Jun 20, 2016 3:00pm EDT
 
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By Edward Krudy

NEW YORK (Reuters) - Global stock indexes jumped on Monday and sterling posted its strongest gain since 2008 after polls showed support for Britain staying in the EU strengthened before Thursday's referendum.

At the start of what could be a frenetic weak for global markets, safe-haven assets such as government bonds and gold retreated. Monday's surge in equities saw Wall Street recover losses from last week, when the chances of the United Kingdom exiting the EU, or "Brexit", appeared to be growing.

The surge in sterling, which rose more than 2 percent against the dollar, coincided with a broad retreat in the greenback as several polls showed the "Leave" campaign weakening. Markets will likely remain volatile and headline-driven in the run-up to the vote, which appears too close to call.

"If I had a seatbelt while watching the markets, I'd put it on," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

The MSCI's all-country world stock index .MIWD00000PUS surged 1.9 percent, while Wall Street stocks as measured by the S&P 500 .SPX jumped 1 percent, their strongest daily increase in nearly three weeks.

Two polls showed "In" regaining the lead and another showed the "Out" campaign's lead narrowing, though the overall picture was of an evenly-split electorate. Bookmakers' odds have shown those wishing to stay in the EU ahead, and Betfair put the implied probability of a vote to "Remain" at 72 percent on Monday, up from 60-67 percent on Friday.

"Everyone is going to hold their breath until Thursday or Friday, when we get to know the result," said Adam Hewison, chief executive of Ino.com in Maryland.

U.S. Treasury yields rose as traders trimmed safe-haven holdings of lower-risk government debt. Benchmark 10-year Treasury yield US10YT=RR rose over 5 basis points from late Friday to 1.671 percent after reaching 1.680 percent earlier Monday.   Continued...

 
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., June 9, 2016.  REUTERS/Brendan McDermid