INTERNATIONAL MARKETS-Stocks down, bonds rally as “” Brexit”” vote looms

A lady dressed in a robe is shown in an electronic board showing Japan’s Nikkei share average outside a brokerage in Tokyo, Japan, April 18, 2016.

Reuters/Toru Hanai

Asian shares pulled back on Friday as investors sought haven in safe-haven possessions amidst festering issues over the June 23 referendum that could see Britain leave the European Union. MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.6 percent, however continues to be poised for a weekly gain of 1.7 percent. Japan’s Nikkei declined 0.5 percent, extending losses for the week to 0.3 percent. China’s CSI 300 index slipped 0.4 percent, and the Shanghai Composite pulled back 0.3 percent, setting them up for falls of 0.8 percent and 0.4 percent respectively. Hong Kong’s Hang Seng index slipped 0.3 percent, moving towards a loss of 1.4 percent for the week. “There are concerns over ‘Brexit’ as polls appear to suggest the possibility of Britain leaving Europe is rising,” said Tatsushi Maeno, managing director at PineBridge Investments. “You cannot purchase risk assets under such conditions even if you want to,” he stated. Wall Street shares likewise pulled back on Thursday after 3 days of gains, as a decrease in the number of unemployment benefits declares recently showed the labour market stays strong regardless of May’s unexpected drop in task growth. The S&P 500 lost 0.17 percent to finish at 2,115.48, but remained just about 15 points listed below its record closing high. International bond yields dropped to new lows and perceived safe-haven currencies gained as financiers ran away to the security of bonds on concerns about Britain’s mandate on European Union subscription on June 23. “There are a number of different aspects driving yields lower and it started last week with the weak U.S. tasks data pushing rate-hike expectations back,” stated Patrick Jacq, European rate strategist at BNP Paribas.

” For the euro zone, this was the only constraining factor for lower yields.” German 10-year Bunds yield struck a record low of 0.023 percent while the 10-year British gilt yield struck a lowest level of 1.222 percent. The start of the European Reserve bank’s business bond purchase program likewise bolstered European bonds. In Japan, the 10-year government bond yield slipped to minus 0.145 percent, close to the record low of minus 0.140 percent seen earlier in the session. The 10-year U.S. Treasuries yield broke out of the trading variety is has actually been in given that March to meeting a 3 1/2- month low of 1.659 percent on Thursday. It last stood at 1.6798 percent.

The retreat in risk sentiment is showing a benefit for gold, which is hovering near a three-week high, and on track for a 2nd straight weekly increase. Area gold pulled back 0.2 percent on Friday to $1,266.86 an ounce, after climbing as high as $1,271.31 overnight. It’s up 1.8 percent for the week. In the currency market, the decrease in U.S. welfare declares supported the dollar index, which tracks the greenback against a basket of 6 peers. The index advanced 0.3 percent, extending gains for the week to 0.2 percent. The Swiss franc has gained 1.6 percent over the past 5 days, its greatest five-day gain since March 2015, striking a eight-week high of 1.0886 franc per euro on Thursday. It last stood at 1.08980, on track for a weekly boost of 1.8 percent. The low-yielding yen, which tends to be redeemed when threat hunger suffers, stood at 107.13 per dollar, clinging near five-week highs of 106.26 set on Thursday, however continues to be down 0.6 percent for the week. The euro relieved to $1.1298 from a four-week high of $1.1416 set on Thursday, however is poised for a weekly decrease of 0.6 percent.

The British pound was on edge at $1.4456, having actually slipped from this week’s high of $1.4664 touched on Tuesday, and moving towards a drop of 0.4 percent today. Although it has actually stayed 4.5 percent above its seven-year low set in late February, investors are actively looking for defense against a slide in case of Brexit. The expense of hedging versus swings in sterling’s exchange rate over the next month soared, with sterling’s one-month suggested volatility meeting its highest in more than seven years. Oil rates likewise went back after notching another 2016 high. Still, consistent risks by militants against Nigeria’s oil market and fear of more security events that could hit supply limited losses in crude. Global benchmark Brent unrefined futures slipped 0.1 percent to $51.88 per barrel, after having actually risen to as high as $52.86 on Thursday, and looks set to tape a 4.5 percent gain for the week. U.S. unrefined moved 0.2 percent to $50.44 a barrel, poised to end the week 3.7 percent greater. (Editing by Shri Navaratnam and Eric Meijer).

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