Featured # Markets | 4 years ago

Global Stocks Decrease as Safe-Haven Assets Take Off

Worries of economic instability from the European Union, as well as an extended global slowdown, sent stock markets significantly lower on Wednesday. In addition, the British pound fell below $1.30 for the first time in over thirty years. United States Treasury Yield once more dropped to historic lows. Following last week’s stock rally when investors decided to go back into riskier stocks a few days after Britain decided to leave the European Union, the suggestion of another time of financial losses, interest rate decreases, and central bank money-printing to prepare growth have begun to come in, according to analysts.

Wall Street opened lower after stocks down in Europe .FTEU3 as well as a majority of Asia .MIAPJ0000PUS. The Dow Jones industrial average .DJIdecreased by 40.51 points, or 0.23 percent, to 17,800.11 and the S&P 500 .SPX dropped 3.03 points, or 0.15 percent, to 2,085.52, although the Nasdaq Composite .IXIC jumped by 9.33 points, or 0.19 percent, to 4,832.23.

“Today’s decline is not a surprise as investors have had a chance to take a step back and look at things and go, ‘Well maybe it’s not all that good,'” Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago, said.

United States longer-dated Treasury yields hit fresh record lows, also tripped by the consequences of the “Brexit” vote. As a result, before stabilizing on profit-taking and strong U.S. economic data indicating the pace of growth in the service sector rose during the month of June at its fastest pace in about seven months. Benchmark 10-year U.S. Treasury yields US10YT=RR fell as much as 1.321 percent, while 30-year Treasury yields US30YT=RR reached 2.098 percent.

“The move lower in rates has just been absolutely relentless, and even long-standing bond bulls have been surprised by how quickly we moved to this level,” said Gennadiy Goldberg, an interest rate strategist at TD Securities in New York. “There’s definitely an element of the unknown about what the extent of the actual contagion is from Brexit.”


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