Global stocks fell for the second time in nine days on Tuesday, aided by a hefty drop in oil prices and data that showed Britain’s vote to leave the European Union dented German business confidence. European markets fell by 1 percent in the morning trade, as oil slid back below $47 a barrel, which sent commodity firms down 1.5 percent. Stocks in Asia, on the other hand, are failing to build on their latest record highs. Meanwhile, their safe-haven yen, government bonds, and gold, all made ground. Rumors of Asian central bank stimulus remained unanswered. The Australian dollar fell 1 percent to an 11-day low, while the New Zealand dollar fell to a three-week low of $0.7014. Investors are predicting that both central banks could possibly cut their interest rates as early as August.
“The Aussie and the kiwi dollar are providing a bit of interest but the rest of the market is pretty moribund,” said the head of FX strategy John Hardy, of Saxo Bank. Hardy adds that investors are now waiting for clear signals of health within the global economy.
The IMF is due to refresh its World Economic Outlook in Washington later this month, as well as the world’s top finance officials from the 20 top economies, are set to meet in China later this week. Before the meeting, the yuan has climbed slightly higher, after being allowed to drop below 6.7 peer dollar for the first time in five years Monday. Sterling, one of the biggest market movers, steadied after British inflation rose more than expected. This is thanks to a surge in airfare, as soccer fans flew to France for the Euro soccer championship. The data was collected before Britain’s vote to leave the European Union on June 23, which was a result that caused the British pound to plunge.
“Traders and investors are torn which way prices are going to break. It’s a knife edge between optimism and pessimism,” said market analyst Ben Le Brun, of OptionsExpress in Sydney.