Asian stock markets started the week deeply in the red. Japanese equities hit a monthly low, the yen further strengthened against the US dollar. Japan’s 10-year bond yield slid to -0.165%, as the USDJPY retreated to 105.82. Interestingly, even the possibility of further monetary stimulus from the Bank of Japan couldn’t bring the JPY-bears back on the stage. Gold climbed to $1278, oil plunged more than a percent.
In China, the heavy slump in fixed asset growth weighed on investor sentiment during the early hours of trading. Private investment is having a hard time picking up momentum, as private investors appear skeptical to buy into the economic stabilization story. Count down to Brexit referendum
The pound took a fresh hit after latest Brexit polls suggested a very tight gap between the ‘Stay’ and the ‘Leave’ camps. The GBPUSD tanked to 1.4157 in Asia. Despite oversold conditions in the sterling, the upside attempts are expected to confront solid resistance. Pound bears could eventually drag the GBPUSD lower toward the 1.40 mark.
The Bank of England will meet on Thursday and is expected to maintain the status quo at its last meeting before the Brexit verdict. The market remains comfortably short sterling in the run up to the referendum. High volatility and choppy market conditions will be in play for those willing to trade the pound. Traders should be prepared for two-side volatility, although the market remains skewed on the downside.
The FTSE dumped more than 250 points off the June 6th peak, 6322p. The FTSE 100 index tumbled to a monthly low on rising tensions regarding the Brexit referendum. Investors are increasingly moving out of UK stocks as we approach the June 23rd referendum. Given the looming Brexit uncertainties, it is certainly not an opportune time to build fresh long positions in UK stocks. The 200-day moving average, 6150p, is expected to act as a solid resistance before the referendum. The FTSE could revisit the 6000 level.