European markets down but off their worst levels
In another volatile day, leading shares fell back as concerns about the effect of a Brexit vote grew, along with nervousness after the US Federal Reserve expressed caution about the global economy.
But markets came off their lows, helped by a recovery on Wall Street and despite continuing weakness in the oil price, with Brent crude down more than 3%.
At one point the FTSE 100 hit its lowest point since mid-February but it ended only marginally down at 5950. But analysts at Morgan Stanley warned the leading index could fall as low as 5,000 if the UK voted to leave the EU. The final scores showed:
- The FTSE 100 fell 0.27% or 16.32 points to 5950.48
- Germany’s Dax dropped 0.59% to 9550.47
- France’s Cac closed down 0.45% at 4153.01
- Italy’s FTSE MIB fell 0.98% to 16,351.90
- Spain’s Ibex ended down 0.62% at 8199.9
- In Greece, the Athens market lost 3.31% to 556.48 despite news that the next tranche of bailout money was set to be given the go-ahead
On Wall Street, the Dow Jones Industrial Average is barely changed, up 9 points or 0.05%.
On that note, it’s time to close for the evening. Thanks for your comments, and we’ll be back tomorrow.
Bank of England governor Mark Carney has cancelled his planned speech on fintech at the Mansion House tonight following the terrible attack on MP Jo Cox. The Bank said:
In the light of the dreadful attack today on Jo Cox MP the Governor of the Bank of England, Mark Carney, will no longer be delivering the planned speech at Mansion House. The Governor will be attending the event and will now deliver a short speech reflecting on today’s events.
Greece set for €7.5bn loan go-ahead
Over in Greece, the country is likely to get the formal go-ahead for a €7.5bn loan tranche on Friday, after it met all the requirements demanded by creditors.
Eurogroup president Jeroen Dijsselbloem said Greece had met all the prior actions necessary, while the country’s finance minister Euclid Tsakalotos said the first review of Greece’s bailout programme was now essentially completed.
On Friday the European Stability Mechanism is set to ratify the payment. Tsakalotos said, as reported by the Athens-Macedonian news agency:
I appreciate that for many Greeks things are still very difficult, since we passed a lot of difficult measures. I feel a need to say that the next year must not just be the year when we exit the crisis through growth, but a time when we place emphasis on the qualitative aspects of this growth.
The market worries about the UK leaving the EU may be overdone, says Julian Jessop at Capital Economics:
Nervousness about Brexit has obviously been having an increasing impact on sentiment in global markets. This is perhaps seen most clearly in the strong performance of safe havens such as the Japanese yen and the price of gold, which have been tracking the latest referendum odds closely. However, this may not last much longer – for three main reasons.
First, to some extent the nervousness in the markets simply reflects the fact that no-one yet knows the result of the referendum on the 23rd, which is too close to call...
Second, even if the vote is for Brexit, the UK would probably remain a member of the EU for several years. The result of the referendum would only be advisory. While UK politicians cannot ignore the views of the electorate completely, most favour Remain and could drag the process out or try to find a relationship which replicates EU membership in all but name...
Third, the rhetoric of global policy-makers is likely to change dramatically. Currently those favouring Remain have an incentive to talk up the risks of Brexit in an attempt to influence the electorate. But once the votes have been cast, we would expect them to seek to reassure businesses and investors instead.
Admittedly, a UK vote for Brexit (or even a narrow majority for Remain) might embolden EU-sceptics elsewhere in Europe. Other governments may not be able to resist pressure for their own referendums. Brexit could conceivably be the first step towards the break-up of the EU, or the exit of one or more countries from the euro...
The upshot is that the initial market turmoil created by a Brexit vote may be both smaller and shorter-lived than many fear. Indeed, even sterling may not react in the way that many expect. It is likely that worries about the impact on the UK economy would initially cause the pound to weaken – perhaps to as low as $1.20.
Meanwhile Capital Economics has been rehearsing the various outcomes of the referendum in more detail:
Regardless of which way #EUref vote goes, whether it is won by big or small margin will have implications. (1/2) pic.twitter.com/oNjVjjGoqw
— Capital Economics (@CapEconUK) June 16, 2016
But the pound has recovered from lows after England won the Euro 2016 match against Wales. Coincidence? Or was it that brokers were watching the match and weren’t around to halt the slide?
Cable snaps back after Euro 2016 game ends https://t.co/hZzNnPXWWB #forex, #forextrading
— John Hall (@ForExtraReview) June 16, 2016
And this:
FTSE 100 cheers for England: Traded 5,915 at kick-off,
— Interactive Investor (@iiicouk) June 16, 2016
5,918 when Wales scored, 5,920 after England win and 5,962 as fans celebrate. #ENGWAL
Updated
Gold at near two year highs
Sterling is under pressure, shares are falling, oil and base metals are down, but gold continues to be a haven for investors.
Gold has jumped from $1292 an ounce to $1311, a near two year high, on worries about Brexit, as well as the US Federal Reserve’s caution about the global economy.
A survey of companies finds 35% of them think that the UK leaving the EU would be harmful, writes Katie Allen:
A third of businesses in the UK think Brexit would be bad for the economy, according to a poll that also shows company bosses in London and Scotland are most worried about a vote to leave the EU in next week’s referendum.
The survey of 3,394 business owners and finance directors found those in the Midlands, east of England and northern England were the most optimistic about Brexit being helpful to the economy.
The survey, by Charterhouse Research consultancy, found 35% of respondents thought Brexit would be harmful, 25% thought it would be good for the economy and 39% did not think it would make any difference.
The full story is here:
Despite the poll lead for the Leave campaign, some spread betting clients appear to take the opposite view, according to Spreadex financial analyst Connor Campbell:
Interestingly for all the Brexit-fear currently plaguing the markets, Spreadex has seen a consistent trend of clients opting to put their money behind the Remainers. In both size and frequency of bet choosing to stay in the EU has come out on top, that support by and large continuing throughout the last fortnight despite the deluge of polls having Vote Leave pulling ahead. Of course this is no guarantee that Britain will still be in the EU come Friday 24 June. However, in the run up to the general election last year Spreadex’s clients consistently backed a Conservative majority even as the polls predicted the tightest race in decades, so it isn’t hard to imagine a similar outcome this time around.
Britain leaving the EU would not have a direct effect on the Russian economy, said the country’s central bank governor Elvira Nabiullina, repeating comments she made a week or so ago.
In an interview with CNBC (transcript here ) ahead of her appearance at the St. Petersburg International Economic Forum, she said foreign investors’ perception of the Russian economy has improved.
And after last week’s rate cut she said the central bank might reduce its key rate further.
Wall Street opens lower
In line with other global markets, US shares have come under pressure on fears of Brexit and the Federal Reserve’s caution about the global economy.
The Dow Jones Industrial Average is down 130 points or 0.7%, while the S&P 500 opened 0.38% lower and Nasdaq down 0.5%.
The US opening fall has seen the declines in other markets accelerate, with the FTSE 100 now down 62 points or 1%. Germany’s Dax is down 1.3% and France’s Cac has lost 0.95%.
Mixed US data
Meanwhile there have been some mixed economic numbers from the US.
Consumer price inflation rose 0.2%% in May, down on the April figure of 0.4%. Analysts had expected a rise of 0.3%. Core inflation was unchanged at +0.2%
Weekly jobless claims jumped to 277,000, compared to expectations of a 267,000 increase, while the Philadelphia Federal Reserve business conditions index came in at 4.7 compared to expectations of a flat performance. David Morrison, senior market strategist at Spread Co, said:
The dollar fell in the immediate aftermath of the releases while stock index futures also declined.
Referendum or no referendum, there’s a growing feeling that the Fed has lost the plot when it comes to monetary policy. The US central bank switches from dovish to hawkish and back again with worrying regularity and has thrown the notion of “data dependence” out of the window. It is becoming obvious to an increasing number of investors that the Fed cannot bring itself to raise rates, yet is taking all measures to attempt to hide this fact from the market. It’s in a corner where hiking raises the prospect of a violent stock market sell-off, whereas a failure to tighten monetary policy suggests deep-rooted economic problems.
Updated
FTSE 100 falls to lowest level since mid-February
The continuing uncertainty over a possible Brexit, with polls continuing to show the Leave campaign on the front foot, has sent London’s leading shares to their lowest level since the middle of February.
The FTSE 100 is currently down 0.9% at 5911, a low not seen since February 17. As well as Brexit, the cautious comments from the US Federal Reserve about the global economy are also having an impact.
Mining shares are among the main fallers, with copper prices down more than 2% and oil 1.5% lower. However precious metal specialists such as Randgold Resources and Fresnillo are on the rise, as investors seek out gold and silver as havens for their cash.
Banks are also under pressure on fears they would be hard hit by a Brexit decision.
On the foreign exchange markets the pound is down around a cent at $1.41, a near two month low.
Still on interest rates, economist Sam Alderson at the Centre for Economics and Business Research said:
In the absence of a vote to leave later this month, interest rates look unlikely to change for some time to come. Given a generally softening domestic economy and relatively gradual recovery in inflation, we wouldn’t expect the MPC to raise rates until the middle of 2017 at the earliest. However, the currency impact of a leave vote is likely to have a notable impact on the outlook for inflation. This in turn will clearly affect the Bank’s monetary policy stance in the months that follow.
UK interest rates would be cut close to zero in the event of a vote to leave the EU, says RBC Europe’s senior UK economist Sam Hill:
The minutes continue to be non-committal on the direction of a change in monetary policy following a Leave vote even though the Committee acknowledge it could “materially alter the outlook”. Although the MPC only go as far as saying the direction of any move in policy “will depend on the relative magnitudes of the demand, supply and exchange rate effects” we are of the view that Bank Rate would be cut “towards zero” in the event of Brexit. Any short-term spike in inflation following a decline in the exchange rate we would expect to give way to downward pressure on inflation in the medium term – which is the MPC’s policy-relevant horizon – as weak demand is likely to weigh on output.
The one change [in the minutes] which was discernable was an increased emphasis on the international implications. Firstly on referendum uncertainty (“The outcome of the referendum continued to be the largest immediate risk facing UK financial markets, and possibly global financial markets.”) and secondly on the event of a Brexit outcome (“Through financial market and confidence channels, there were also risks of adverse spillovers to the global economy.”). There was also reference to a further fall in sterling “perhaps sharply” in a Leave scenario but in the grand scheme of things these minutes don’t add much to what the MPC has already said on the EU referendum.
The outlook for policy in the Remain scenario – effectively the scenario on which the May Inflation Report was conditioned – isn’t likely to be presented with greater clarity until August at the earliest. However, at this stage news since May “had done relatively little to change the MPC’s assessment of the economic outlook”. The Committee has been clear that data are difficult to interpret due to potential referendum effects. The same will be true until such time as it is thought any such effects have unwound after a Remain vote. We concluded last week... that any Remain rebound in economic activity may be underwhelming.
So, whilst in that scenario our central case is for a 25 basis point Bank Rate hike in February 2017, the skew of risks is now clearly to a more dovish profile rather than a tightening in 2016.
Here’s our report on the Bank of England comments:
The Bank of England has issued a fresh warning that a vote to leave the EU in next week’s referendum risks knocking economic growth, pushing the pound sharply lower and sending shockwaves through the global economy.
Against the backdrop of jittery financial markets, the Bank also revealed its top policymakers had been briefed by staff on contingency planning for the referendum as it readies measures to prevent markets seizing up in the event of a leave vote next week.
Announcing its decision to keep interest rates at their record low of 0.5%, the Bank said the referendum on 23 June was the biggest immediate risk to UK financial markets, and perhaps those overseas, and that the current uncertainty was already denting spending. The pound has weakened in the run-up to the vote as opinion polls have pointed to a lead for the leave vote and the Bank warned in minutes to its latest rate-setting meeting that it would fall further in the event of Brexit.
“The outcome of the referendum continued to be the largest immediate risk facing UK financial markets, and possibly global financial markets,” said the minutes. In addition: “On the evidence of the recent behaviour of the foreign exchange market, it appears increasingly likely that, were the UK to vote to leave the EU, sterling’s exchange rate would fall further, perhaps sharply.”
The full story is here:
But alternatively, a remain vote could mean a rate rise, some believe:
#MPC gives strong warning on #Brexit risks in today's minutes. But a vote to stay would in our view make a turn-of-the-year rate hike likely
— Capital Economics (@CapEconUK) June 16, 2016
ING predicts emergency rate cut if Brexit win
Some economists believe the Bank of England would slash interest rates to fresh record lows if the UK votes to leave the EU next week.
James Knightley of ING predicts an emergency rate cut on Friday if the Leave campaign wins:
He writes:
In the case of Brexit, there is a high probability that inflation rises sharply as a result of currency weakness, but we think that the BoE will look through this, as they did in 2011. Instead we think the focus will be on the growth risks and financial market turbulence, which would dampen domestic inflation pressures over the medium term.
Consequently, we would expect a 25bp rate cut on June 24th.
Andrew McPhillips, chief economist at Yorkshire Building Society, also expects a cut:
“It is likely that if the UK votes to leave the EU, the MPC will cut base rate in an attempt to stabilise the economy.
Though this could lead to an increase in inflation due to the depreciation of Sterling, the Bank is likely to be willing to trade that off against trying to maintain economic growth and avoid the risk of increasing unemployment.
Liberal Democrat leader Tim Farron, a Remain campaigner, has welcomed the Bank of England’s warning:
“This is yet more independent evidence that our economy could plummet if we leave Europe. We cannot afford to let people like Norman Lamont crash the economy for a second time. This is not a political parlour game - people’s jobs, homes and businesses are at risk.”
[Lord Lamont, a Leave supporter, was chancellor on Black Wednesday when Britain crashed out of the European exchange rate mechanism]
The pound has fallen since the Bank of England minutes hit the wires.
It has lost one cent against the US dollar to hover around $1.41, near to a two-month low.
Traders are also reacting to yet another poll showing Leave ahead. Survation reports that 45% of voters support Leave, with 42% backing Remain (and the rest undecided).
Bank of England isn't pulling its punches. pic.twitter.com/G5eU9w4J7E
— (((Duncan Weldon))) (@DuncanWeldon) June 16, 2016
Bank minutes: Referendum uncertainty across the economy
The Bank of England’s policymakers heard plenty of evidence that the UK economy has weakened due to next week’s referendum vote.
The minute of the MPC meeting state that:
In the corporate sector, this included a sharp decline in the value of commercial real estate transactions and M&A, and reports of delayed business investment.
Evidence from the Bank’s Agents had suggested increased delays in corporate decision making, which was corroborated by a Deloitte survey of chief financial officers.
Survey information from Markit/CIPS and the BCC showed that for a material proportion of responding firms the referendum was having a detrimental effect on business activity, sometimes significantly so.
They also point to signs that demand for new cars and houses has fallen recently.
However.... the Bank also points out that other surveys have shown consumer demand is solid (such as this morning’s strong retail sales).
Minutes of @bankofengland attribute a fall in property and even car sales to referendum uncertainty. pic.twitter.com/GSqBaGVmFn
— Joel Hills (@ITVJoel) June 16, 2016
The Bank of England appears to have hardened its Brexit warnings, despite pressure from the Leave campaign to cool things down.
Breaking: Bank of England strengthens its warnings on EU referendum risk - saying uncertainty could "spill-over" into global markets
— Kamal Ahmed (@bbckamal) June 16, 2016
Main #EURef related section of @bankofengland minutes today. Language similar to previous, if a little amplified pic.twitter.com/ytm4G6CZvM
— Ed Conway (@EdConwaySky) June 16, 2016
BoE: Pound will probably tumble if Leave campaign win
The Bank of England has also issued a fresh warning that the pound will tumble in the event of a Brexit vote.
The minutes state that:
“On the evidence of the recent behaviour of the foreign exchange market, it appears increasingly likely that, were the UK to vote to leave the EU, sterling’s exchange rate would fall further, perhaps sharply.”
The Bank also revealed its top policymakers had been briefed by staff on contingency planning for the referendum as it readies measures to prevent markets seizing up in the event of a leave vote next week.
Bank of England warns about referendum uncertainty
The Bank of England has warned that next week’s EU referendum is already hurting the UK economy.
It says there are signs that major spending decisions are being delayed, such as car and house purchases, as consumers and businesses wait to see if the UK votes to leave the European Union.
In the minutes of this month’s monetary policy meeting, just released, they say:
The outcome of the referendum continues to be the largest immediate risk facing UK financial markets, and possibly also global financial markets.
While consumer spending has been solid, there is growing evidence that uncertainty about the referendum is leading to delays to major economic decisions that are costly to reverse, including commercial and residential real estate transactions, car purchases, and business investment
Updated
BoE policymakers were unanimous in leaving borrowing costs on hold, and also leaving the quantitative easing programme unchanged.
Bank of England maintains #BankRate at 0.5% and the size of the Asset Purchase Programme at £375 billion...
— Bank of England (@bankofengland) June 16, 2016
...Minutes of the MPC meeting reveal unanimous vote on #BankRate and Asset Purchases
— Bank of England (@bankofengland) June 16, 2016
Bank of England leaves rates on hold
Breaking: The Bank of England has left interest rates unchanged at their record low of 0.5%, continuing a run dating back to March 2009.
And here come the minutes of the meeting.....
10 minutes to go.....
Stand by for @bankofengland int rate decision/minutes. No doubt they’ll warn abt Brexit impact (again). But will they go further than words?
— Ed Conway (@EdConwaySky) June 16, 2016
Bad news from Greece -- the unemployment rate has jumped to 24.9% in the first quarter of this year.
That’s a rise from 24.4% in October-December.
Indonesia just surprised the markets by unexpectedly cutting interest rates!
*BANK INDONESIA CUTS REFERENCE RATE TO 6.50% FROM 6.75%
— World First (@World_First) June 16, 2016
Most economists surveyed by Reuters had expected the BoI to hold, butt instead it has eased monetary policy to in a bid to stir growth.
Consumer goods giant Unilever has become the latest UK company to encourage staff to vote Remain next week.
It has sent a letter to all 100,000 staff, signed by CEO Paul Polman and his three predecessors, saying the firm would be “negatively impacted” by Brexit, adding:
“We therefore hope that in the interests of Unilever, the UK,Europe, and indeed the wider global economy, the UK will choose to Remain and thereby continue to play a central role in Unilever’s long-term growth and prosperity.”
So not actually a demand that staff reject Brexit, but a clear nudge.....
Mark Carney blasts Brexit criticism
The Bank of England have now published governor Mark Carney’s letter to Leave campaigner Bernard Jenkin MP.
It’s a tinglingly robust slapdown to Jenkin’s criticism that the BoE shouldn’t make “public comments” about the referendum.
Carney begins by saying:
I am responding to your letter to dispel immediately the numerous and substantial misconceptions it contained.
And he then explains that the Bank of England has respected its independence, and stuck firmly to its remit when it has talked about Brexit dangers.
..Governor Mark Carney says no hits back in letter to Leave director @bernardjenkin criticises his "misconceptions" pic.twitter.com/KldisaYb2W
— Faisal Islam (@faisalislam) June 16, 2016
Updated
The US Federal Reserve must take some blame for today’s selloff.
Last night, the Fed cited weakening economic growth as one reason for leaving interest rates on hold.
And that has dampened the mood in the City, says Chris Beauchamp of City firm IG:
There has been little to comfort investors over the past 24 hours, which is why yesterday’s gains have withered on the vine. The Fed meeting was perhaps their best hope, but even here Janet Yellen was not able to offer much in the way of good news.
After two hours of trading, every European stock market has lost ground.
Worries about the global economy, and central bankers’ ability to stimulate growth, are hitting shares -- along with Brexit concerns.
Avtar Sandu, senior commodities manager at Phillip Futures in Singapore, told Reuters:
The market is going to be soft until next week. The fear is that if the British actually decide to leave the EU there may be some sort of contagion.
Investors are also alarmed by the big moves in Japan overnight, with shares sliding and the yen soaring.
Sea of red on #Markets ahead of #BoE decision -will Mark Carney speak out against #EUreferendum again? Japan markets tumble 3% after no move
— Katie (@KatiePilbeamIG) June 16, 2016
UK retail sales smash forecasts
Boom! UK retail sales jumped by 0.9% last month, beating forecasts of a 0.2% rise.
A surge in clothing sales led the recovery, according to the Office for National Statistics.
Sales were 6.0% higher than a year ago, the biggest jump since September 2015.
Clothing sales jumped by 4.3% during the month, the biggest rise in two years. Brits may have splashed out on new summer outfits as the sun made a rare (if brief) appearance through the clouds.
This doesn’t suggest shoppers are hunkering back in fear that Britain is about to leave the EU. Unless....
*U.K. MAY RETAIL SALES RISE 0.9%; MEDIAN EST. 0.2% GAIN
— Five Minute Macro (@5_min_macro) June 16, 2016
Notable rises in tinned food, duct tape, bottled water and shortwave radios.
Dear @ONS was the surge in UK Retail Sales due to purchases of tinned food and spades for digging underground shelters? #Brexit
— Shaun Richards (@notayesmansecon) June 16, 2016
Updated
The European Central Bank has warned that Britain’s referendum as a threat to the eurozone economy.
In its monthly economic outlook, released this morning, the ECB says:
Downside risks continue to relate to developments in the global economy, to the upcoming British referendum on EU membership and to other geopolitical risks.
The ECB is also worried about the global economy, cautioning that:
....the outlook for emerging market economies remains more uncertain as growth in China decelerates and commodity-exporting countries adjust to lower commodity prices.
Pound down (a bit)
The pound is weakening this morning, but it’s not a full-blown rout.
Sterling is down around half a cent against the US dollar at $1.415, and a similar amount against the euro at €1.256.
That’s a fairly muted reaction to this new IPSOS MORI poll putting Leave ahead.
It’s being published in the Evening Standard today, which says:
It is the first time since David Cameron pledged the referendum in January 2013 that Vote Leave have come out ahead in the respected monthly Ipsos MORI telephone survey, which is exclusive to the Evening Standard.
Immigration has overtaken the economy as the most important issue to how the public will vote, which is a significant boost to Boris Johnson and the Leave campaign.
LEAVE SENSATION: Our shock @IpsosMORI phone poll finds Remain six ponts behind https://t.co/8dgF0CQ0jN
— Joe Murphy (@JoeMurphyLondon) June 16, 2016
Another 'why isn't sterling down more' moment.
— Mike Bird (@Birdyword) June 16, 2016
Just in.... a new opinion poll, putting giving the Leave campaign in the lead by 53% to 47%.
That’s a significant turnaround compared with last month:
Significant collapse in REMAIN vote with LEAVE now on 53%, finds @IpsosMORI pic.twitter.com/gJaRF4Cxot
— Michael Savage (@michaelsavage) June 16, 2016
All this criticism from the Leave campaign probably won’t prevent the Bank of England from citing Brexit fears in the official minutes of this week’s MPC meeting.
It would be odd, frankly, if they ignored it, given the recent volatility.
Conner Campbell of SpreadEx reckons it could spark a deeper selloff.
The FTSE could well see its losses intensify as the day goes on with the Bank of England set to stoke those Brexit-fearing fires later this morning with a firmer warning against leaving the EU (the central bank is also expected to unsurprisingly keep interest rates on hold).
Mark Carney faced a lot of criticism last time he expressed an opinion on the referendum, so expect an apoplectic reaction from Vote Leave (and perhaps another fall from the pound) as Thursday continues.
Crumbs, the Bank of England is really under fire from the Brexit camp.
Bernard Jenkin MP, a director of the Vote Leave campaign, has written to governor Mark Carney warning him not to breach the pre-referendum “purdah” rules by talking about the referendum.
Clearly Carney’s warning that Brexit was the biggest domestic risk to the UK economy, and could trigger a recession, has riled Leave campaigners.
But Carney has hit back, telling Jenkin that the Bank has simply been following its statutory duty to the UK people.
“All of the public comments that I, or other Bank officials, have made regarding issues related to the referendum have been limited to factors that affect the Bank’s statutory responsibilities and have been entirely consistent with our remits.”
And he finished with a zinger:
*Serious* shade from Carney. https://t.co/L9iElg8xHl #EUref pic.twitter.com/WM770kCtAB
— Katie Martin (@katie_martin_fx) June 16, 2016
Great BBC scoop, confirmed by Bank of England https://t.co/zVct2tWcJO
— Chris Giles (@ChrisGiles_) June 16, 2016
Updated
Bank of England criticised
Prime minister David Cameron has leapt to the Bank of England’s defence, after a volley of criticism from senior grandees.
Former chancellors Lord Lamont and Lord Lawson and ex-Tory leaders Iain Duncan Smith and Lord Howard accused the BoE, and the Treasury, of peddling “phoney forecasts” about the dangers of Brexit.
The quartet declared:
“There has been startling dishonesty in the economic debate, with a woeful failure on the part of the Bank of England, the Treasury and other official sources to present a fair and balanced analysis.
“They have been peddling phoney forecasts and scare stories to back up the attempts of David Cameron and George Osborne to frighten the electorate into voting Remain.”
Cameron (whose Remain campaign has relied on dire economic warnings), has hit back:
1/2. It's deeply concerning that the Leave campaign is criticising the independent Bank of England.
— David Cameron (@David_Cameron) June 16, 2016
2/2. We should listen to experts when they warn us of the dangers to our economy of leaving the European Union.
— David Cameron (@David_Cameron) June 16, 2016
Mike van Dulken of Accendo Markets says:
Brexit fears continue to intensify a week out from the referendum, with the Federal Reserve again citing it as a headwind last night.
The markets struggling to shrug off risk aversion sending bond prices higher and yields ever lower or more negative.
And he fears the FTSE 100 could continue to slide, perhaps losing another 400 points to 5,500:
#FTSE100 failure to conquer 6000 yday means we could revisit Feb lows 5500 via a 400pt bearish flag pattern pic.twitter.com/HhuYhxyEh4
— Mike van Dulken (@Accendo_Mike) June 16, 2016
FTSE 100 hits near four-month low
European stock markets have opened in the red, hit by the familiar cocktail of economic worries and Brexit angst.
In London, the FTSE 100 has dropped by 50 points, or 0.85%, to 5916. That erases yesterday’s recovery, and is the lowest point since 24 February.
It means the index has lost around £100bn of value in the last week alone.
Mining stocks and banks are among the biggest fallers in the City.
The French, German, Spanish and Italian markets have all dropped by over 1%, with traders fretting about how their economies will suffer if Britain leaves the EU.
Nikkei tumbles and yen soars after BoJ decision
The Tokyo stock market has tumbled by 3% today, after the Bank of Japan left its stimulus programme on hold ahead of the Brexit referendum.
Hopes that the BoJ might announce fresh stimulus measures were dashed. Instead, policymakers voted to continue expanding the monetary base at an annual rate of about 80 billion yen.
That hit stocks, but also triggered a rush of money into the yen.
Japan’s currency smashed through the ¥104 mark against the US dollar for the first time since August 2014, trading as strongly as ¥103.98 to $1.
That will alarm top brass in Tokyo, who would rather see a rather weaker currency (to push up inflation away from around zero)
Live scenes from the BOJ as USDJPY cracks 104.00 for the first time since August 2014 pic.twitter.com/I9xPEQGCnq
— World First (@World_First) June 16, 2016
The BoJ also singled out next week’s EU referendum as a key geopolitical threat to the Japanese economy, along with the “European debt problem”.
No action from #BoJ. Yen soars, #Nikkei closes down 3%. Will their hand be forced if #Brexit fears drives up the value of the yen further?
— Sally Bundock (@SallyBundockBBC) June 16, 2016
Updated
The agenda: One last Brexit warning from the Bank of England?
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
It’s Bank of England day. At noon, the Monetary Policy Committee will release its latest decision on interest rates, and say whether is is taking any fresh steps to stimulate the economy.
No changes are expected. But instead, the MPC is likely to release a fresh warning about the risks posed by next week’s EU referendum. The minutes of this month’s meeting could also highlight the harm already caused by Brexit uncertainty.
The financial markets are already in a nervous mood today, after the US Federal Reserve slashed its forecasts for interest rate hikes – and pinned some of the blame on the UK’s referendum vote.
Also coming up today:
- 9am: The European Central Bank publishes its latest economic bulletin
- 9.30am: UK retail sales figures for May
- 12: Bank of England decision, and minutes released
- Eurozone finance ministers are holding a Eurogroup meeting this afternoon.
- BoE governor Mark Carney will be speaking at the Mansion House tonight, but not until 9pm.
We’ll be tracking all the main events through the day....
Updated
