News: Press Clippings

U.S. Markets: What ‘Brexit’?

Reposted from The Wall Street Journal

Publication date 6/23/2016

If there’s fear in the markets, it’s not showing up on the U.S. charts.

As U.K. voters go to the polls Thursday to decide whether the nation should stay in the European Union, polls show a nearly 50-50 split, making the decision too close to call. Whatever the outcome, the election is expected to be felt across global markets and politics.

That hasn’t worried U.S. investors like Greg Zappin, a portfolio manager at Penn Mutual Asset Management, who said he hasn’t adjusted his positions specifically to prepare for the vote. He said he will look to take advantage of any market dislocations after the results are in.

“Clearly the market seems to be a lot more optimistic that they are going to stay in the union,” Mr. Zappin said. “If it goes the other way, I think there is probably more downside.”

The S&P 500 index jumped 0.7% and flirted with the 2100 level in early trading. The CBOE Volatility index, a measure of stock market fear that closed Wednesday at its highest since February, dropped 13% in the morning hours.


The yield on the benchmark U.S. 10-year Treasury note climbed 0.03 percentage points to 1.71%. It’s up 0.15 percentage points from a week ago. Yields typically rise, and prices fall, when safe assets like U.S. government debt aren’t as much in demand.


Gold, another asset whose price tends to rise during times of fear, is down 0.4%.


Oil prices are up 1.3%.


The WSJ Dollar Index fell 0.2%.


All of this suggests a lack of widespread worry over the outcome. It may also suggest a lack of knowledge. Nearly three-quarters of Americans aren’t even aware of the vote, CNBC reported, citing a poll from marketing and advertising firm Fluent.

Still, investors and traders are likely to be among the more savvy Brexit watchers. On Investopedia, a website that provides financial information, traffic to the page that defines Brexit is up 700% over the last month.

All of which suggests that traders will be watching the results closely, but believe they know the outcome.

“Markets appear to have come to the conclusion that Britain will remain in the EU,” wrote Aaron Kohli, a rates strategist at BMO Capital Markets.


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