Belfast Telegraph

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US stocks jump as Britain votes on EU membership

Published 23/06/2016

Investors bought stocks and sold bonds, sending bond yields and banks higher
Investors bought stocks and sold bonds, sending bond yields and banks higher

US stocks made their biggest gain in a month as investors grew more optimistic that Britain would vote to stay in the European Union.

Investors bought stocks and sold bonds, sending bond yields and banks higher.

On the last trading day before results from the referendum, stocks continued to rise as investors grew more confident Britain will not leave the union. Bank stocks did the best, while materials companies also rose.

The price of oil topped 50 dollars a barrel. Utility companies, which are generally seen as a safe investment, lagged the market as investors took a few more risks.

US stocks have advanced about 2% this week. Before that, the market slumped as investors worried that a Leave vote would disrupt the economies of Britain and Europe.

Throughout this year, the market has bobbed up and down as investors traded on political and central bank news, like the British referendum and comments from the Federal Reserve.

J.J. Kinahan, chief strategist at TD Ameritrade, said that is because the global economy is sluggish. Corporate profits and revenues have also been uninspiring.

"What it really shows is just a lack of growth," he said. "That makes it very difficult to commit capital and I think that's a pattern you're going to continue to see."

The Dow Jones industrial average jumped 230.24 points, or 1.3%, to 18,011.07. The Standard & Poor's 500 index rose 27.87 points, also 1.3%, to 2,113.32. The Nasdaq composite climbed 76.72 points, or 1.6%, to 4,910.04.

European stock indexes also advanced. France's CAC 40 rose 2% and Germany's DAX gained 1.8. The FTSE 100 rose 1.2%.

Bond prices declined, sending the yield on the 10-year Treasury note up to 1.75% from 1.69% a day earlier.

Higher bond yields mean higher interest rates, which allow banks to make money on lending. Citigroup rose 1.78 dollars, or 4.2%, to 44.46 dollars and Bank of America gained 43 cents, or 3.2%, to 14.04 dollars.

The pound rose to 1.4808 dollars from 1.4691 dollars, its highest level of the year. The pound has got stronger as investors grew more confident Britain will stay in the EU. The dollar rose to 105.78 yen from 104.47 yen. The euro rose to 1.1351 dollars from 1.1307 dollars.

US crude rose 98 cents, or 2%, to 50.11 dollars a barrel in New York. Brent crude, the benchmark for international oil prices, rose 1.03 dollars, or 2.1%, to 50.91 dollars a barrel in London. Among energy stocks, Chevron picked up 2.15 dollars, or 2.1%, to 104.44 dollars and ConocoPhillips rose 1.64 dollars, or 3.7%, to 45.63 dollars.


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