Global stocks rose on Monday and sterling strengthened broadly while safe-havens, including the yen and gold, retreated after polls showed support for Britain staying in the EU regaining momentum before Thursday’s referendum.
Sterling has been at the sharp end of worries Britons will vote to leave the European Union, and the slightly diminished Brexit fears pushed the pound up 1.5 per cent against the dollar and more than 2 per cent versus the yen.
Share prices, which fell globally in recent days on the prospect of Britain quitting the bloc as some polls showed the “Leave” campaign ahead, rose strongly.
The pan-European FTSEurofirst 300 index added 2.9 per cent, led by banks, while Britain’s blue-chip FTSE 100 index chalked up a similar gain.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.6 per cent. Japan’s Nikkei climbed 2.4 per cent as the yen lost ground.
US e-mini stock index futures were up more than 1 per cent, suggesting Wall Street would also open higher.
Poll results
Two weekend polls showed “In” regaining the lead and another showed the “Out” campaign's lead narrowing, though the overall picture is 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 per cent on Monday, up from 60-67 per cent on Friday.
Campaigning resumed on Sunday, having been suspended for three days after British lawmaker Jo Cox was killed in the street in her constituency on Thursday.
“It might be possible that the events influenced the polls but most experts commented that it is more likely that an expected and well documented 'pull to the status-quo' is responsible for the latest swing,” RBC's chief European macro strategist Peter Schaffrik said.
Sterling gained 1.64 percent to $1.4591, having hit a two-week low of $1.4013 on Thursday. It soared 2.2 percent to 152.63 yen and rose 1.1 percent against the euro to 77.72 pence.
“The outcome of the referendum is wide open again,” said Ulrich Leuchtmann, currency strategist at Commerzbank. “But at least “Leave” no longer seems the most likely scenario. Should the next polls suggest that the change of sentiment persists euro/sterling may ease further.”
Euro
The euro, which has also suffered due to Brexit worries, rose 0.6 per cent to $1.1342, off a high for the day of $1.1382.
The yen, often sought by investors in times of market tension, fell half a percent to 104.62 per dollar. The dollar fell 0.6 per cent against a basket of currencies.
Yields on Low-risk government bonds, another asset sought in troubled times, rose. US 10-year Treasuries yielded 1.65 per cent, up 3.6 basis points, after hitting a four-year low of 1.518 per cent on Thursday.
German 10-year yields were close to 0.05 per cent, up from a record low of minus 0.037 per cent on Thursday.
Crude oil
Oil prices, which have also been under pressure from Brexit nerves, extended Friday’s gains. Brent crude traded within a whisker of $50 a barrel at $49.98, up 81 cents on the day.
Gold, another safety play, fell 0.9 per cent to $1,286.86 an ounce. It rose 1.5 per cent on Friday for its biggest single-day gain since June 3.