Brexit chaos sends pound plunging, as stocks mixed

U.S. stocks traded mixed, recovering from lows of the day that briefly erased gains for the year. The pound plunged as the Brexit process threw the U.K. government into chaos.

Canada’s main stock index was lower in late-morning trading amid losses in the energy, financial and industrial sectors, while the loonie edged up compared with the U.S. dollar.

The S&P/TSX composite index was down 28.54 points at 15,104.58.

Consumer shares led declines after J.C. Penney and Dillard’s posted disappointing numbers. California utility PG&E Corp. tumbled, gripped by a crisis over whether its equipment set off a deadly wildfire. Gains in hardware makers including Apple and Cisco Systems limited U.S. stock losses. Crude extended Wednesday’s rebound from a record losing streak. Treasuries rallied.

For all the worries assailing investors — on top of Brexit is the ongoing trade dispute and Italian budget stress — they are at least receiving a steady message from the U.S. central bank. In a question-and-answer session late Wednesday, Federal Reserve Chairman Jerome Powell played down recent turbulence in equities, saying volatility was only one of many factors that board members take into account when setting policy.

“The Fed is going to go all the way this time and the market has recognized this all year,” Mike Wilson, Morgan Stanley’s chief U.S. equity strategist, said on Bloomberg TV. “That’s why we have this rolling bear market that we’ve called for.”

“There’s been no place to hide this year,” he added. “Stocks, bonds, currencies, you name it.”

Sterling tumbled after Brexit Secretary Dominic Raab announced his resignation, the highest-profile of several departures on Thursday. Brexit-backer Jacob Rees-Mogg later joined calls for a vote of no confidence in Prime Minster Theresa May. The events throw into doubt her ability to secure Parliament’s support for the exit plan — and even to survive as leader. As the Westminster resignations rolled in, gilts surged.

The prime minister defended her plan as she addressed lawmakers in the House of Commons, but faced a barrage of critical questions and was repeatedly told she does not have the support she needs to pass the deal.

Emerging-market shares rallied and their currencies strengthened. In Asia, Japanese stocks edged lower, while Hong Kong shares jumped after Tencent Holdings Ltd. earnings beat expectations. Chinese equities outperformed as reports indicated officials have outlined a series of potential concessions to the Trump administration. The Australian dollar climbed after a strong local jobs report.

These are the main moves in markets:

Stocks

The S&P 500 Index fell 0.1 per cent as of 11:29 a.m. New York time; the Nasdaq Composite Index added 0.3 per cent. The Stoxx Europe 600 Index declined 1.1 per cent to the lowest in more than two weeks. The U.K.’s FTSE 100 Index was little changed. The MSCI Emerging Market Index gained 1.2 per cent to the highest in a week.

Currencies

The Bloomberg Dollar Spot Index climbed 0.2 per cent. The euro was little changed at US$1.1309. The British pound decreased 1.8 per cent to US$1.2759, the weakest in more than two weeks. The Japanese yen climbed 0.2 per cent to 113.39 per dollar.

Bonds

The yield on 10-year Treasuries fell four basis points to 3.09 per cent, the lowest in more than two weeks. Germany’s 10-year yield decreased four basis points to 0.35 per cent. Britain’s 10-year yield decreased 15 basis points to 1.36 per cent, the lowest in more than 11 weeks.

Commodities

West Texas Intermediate crude climbed 1.1 per cent to US$56.88 a barrel. Gold gained 0.2 per cent to US$1,213.22 an ounce. Copper rose 1.6 per cent to US$2.754 a pound.

Source: BNN Bloomberg
https://www.bnnbloomberg.ca/brexit-chaos-sends-pound-plunging-as-stocks-mixed-1.1168346