U.S. stocks traded higher prior to the Britain’s vote on membership in the European Union and as Federal Reserve Chairwoman Janet Yellen commented on the possible effects of the Brexit.
Fed Chairwoman Yellen said that the central bank remained cautious on its approach to the possible exit of Britain in the European Union. Yellen indicated the risk to the US economy and global financial stability involved in the significant market event.
As the market focused on the Thursday referendum, the global stocks were pushed higher. The Nasdaq Composite Index advanced 0.1 percent after playing between the 26-point range while the S&P 500 increased 0.3 percent as it traded within an 11-point range.
Moreover, the Dow Jones Industrial Average gained 0.14 percent headed by the strong performance of Microsoft Corporation. After hitting the 3-day high, the Stoxx Europe 600 declined 0.1 percent with the euro losing 0.2 percent against the greenback.
Germany’s DAX 30 advanced 0.42 percent ,while France’s CAC 40 rose 0.29 percent as the energy-related stocks posted gains together with the financial stocks. The FTSE 100 in London was up 0.20 percent, marking its four-consecutive gains.
Shares in Asia remained moderately higher led by the S&P/ASX 200 which went up 0.22 percent and the Shanghai Composite with a 0.45 percent increase. The Nikkei 225 lost 0.64 percent with almost 1500 falling stocks on the Tokyo Stock Exchange while the Nikkei Volatility added 7.78 percent.
Market experts believed that the U.S. central bank was weighing the market sentiment of Brexit before it would push the first rate hike this year. Investors remain indecisive in their positions as they wait for the clarity of the uncertainties spread through the market at the moment. Partly, the decision of the Fed after the Brexit was one of the table of the market players.
A chief market analyst said that there is nothing new in the statement of Yellen. “They (Yellen and the FOMC) remain scared about the implications of higher rates on fragile economy that remains very overindebted and what higher rates will mean for asset prices.”
Based on the recent polls, approximately 44 percent of the voters wanted to leave while 45 of them voted to remain. The United Kingdom was divided into two groups, the remain camp and the leave camp. Experts believe that those who wanted to run away from the immigration concerns across the region wanted to leave.
“It’s been seven years and people are looking for scapegoats. They haven’t seen an improvement, see businesses and high-wage earners making money, but they’re muddling through, so immigrants become a scapegoat, ” explained by Robert Pavlik, the chief market strategist at Boston Private Wealth.
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