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FTSE sold on Brexit poll, cheaper oil
The FTSE and the pound are both under pressure after the latest ICM/Guardian telephone survey revealed a seismic shift in favour of leaving the EU. FTSE futures slipped below the 6200 handle for the first time in a week.

Cheaper oil and commodity prices weigh on energy stocks and miners at the open. BP (-1.20%), Glencore (-1.95%), Rio Tinto (-1.60%), Anglo American (-2.57%) and BHP Billiton (-1.58%) are again among the leading losers at the open.

Clearing the 6200 mark has underpinned the sell-off in the FTSE and could cause higher price volatility throughout the day. Energy and miners are the most vulnerable sectors.

At 6170, the FTSE would have retraced the half of the May 19th – May 31st recovery. A step below the 6170 could pave the way toward the 6050/6000 as investors are expected to trim their long positions before the Brexit referendum.

Japan’s sales tax delayed to 2019

Japanese stock investors barely reacted to news that the next sales tax hike in Japan has been postponed to late 2019. Nikkei lost 1.62% after the data showed a considerable 3.3%y/y slump in Japanese firms’ sales in Q1 and 9.3%y/y contraction in profits. The USDJPY fell to 109.65 in Tokyo. Yen bears remain sceptical above the 110 mark.

The Aussie has been the best performer against the USD on the back of a better-than-expected GDP growth in Q1 (1.1%q/q). Although the solid growth data decreases the chances of an additional RBA rate cut in June, swap traders give almost a 50% probability for an August cut.

Strong Australian GDP print didn’t manage to cheer up the markets in Sydney. Australian ASX lost past 1% on the back of the fifteenth consecutive month of contraction in Chinese manufacturing activity in May.

Oil cheapens ahead of OPEC meeting

Oil is set for the longest losing streak in six weeks ahead of the OPEC meeting scheduled on Thursday in Vienna. The $50 dollar per barrel appears to be a strong barrier as OPEC is unlikely to reach an agreement to limit production this week. Nevertheless, rising financial pressures bring the world’s most cost-efficient producers to raise debt to cope with the cost of extending their market share at the current market prices. Abu Dhabi sold $5 billion worth of government bonds in April as Saudi Arabia is preparing to issue $15 billion worth of bonds by early July.

Fading appetite in the USD

In New York, the appetite in US dollar seemed limited through the first trading session following Janet Yellen’s speech last Friday. US stocks pared gains on the hawkish Fed posture. Given the deterioration in global risk sentiment, we could expect a further slide in Dow Jones and the S&P500 at today’s session.

We call the Dow at 17780 and the SPX at 2095 at the US open.