Global stocks extend losses, sterling near 30-year lows in Brexit aftermath

Tokyo: Global equities took another step down in Asia on Tuesday, with regional markets sliding and sterling wallowing near three-decade lows as Britain’s shock vote to exit the European Union continued to roil financial markets. [caption id=“attachment_2859570” align=“alignleft” width=“380”]  A man is reflected in a stock quotation board outside a brokerage in Tokyo, Japan. REUTERS[/caption] MSCI’s broadest index of Asia-Pacific shares outside Japan slumped 0.3 percent, after Wall Street marked its worst two-day drop in about 10 months. Japan’s Nikkei stock index was down 1.3 percent in early trading. It has remained volatile in recent days, rebounding 2.4 percent on Monday following its 7.9 percent plunge on Friday. The pound edged down slightly to $1.3229, having skidded from a session high of $1.5022 on Friday ahead of the Brexit vote results. It fell as low as $1.3122 on Monday, its deepest trough since 1985. The Brexit shock on Thursday has continued to reverberate around global financial markets amid deep uncertainty about Britain’s future as well as the European Union, raising worries about global growth at a time when many economies remain pressured. Against the yen, sterling slipped 0.1 percent to 134.61, not far from Friday’s 3-1/2 year low of 133.18. The euro stood at 83.29 pence after scaling a two-year peak of 83.79 pence on Monday. Standard & Poor’s Ratings Service stripped Britain of its last remaining triple-A credit rating on Monday, cutting it by two notches to ‘double-A,’ while Fitch Ratings reduced their UK rating by one notch to ‘AA.’ The euro edged down slightly to $1.1020, not far above Friday’s three-month low of $1.0912 as it faced the impact of the British vote outcome. “In the near term, risk aversion and market uncertainty makes the euro less attractive to investors,” Kathy Lien, managing director of foreign exchange strategy at BK Asset Management, wrote in a note to clients. “In the long run, Brexit also raises questions about the Eurozone’ s viability because if major countries like Britain start dropping out the EU, nationalism could drive smaller Eurozone nations to exit out of the euro,” she said, adding that expects the euro to ‘make another run’ for the $1.0900 level. The perceived safe-haven yen rose, with the dollar slipping 0.2 percent to 101.84 yen after it broke under 100.00 yen on Friday for the first time since late 2013. The euro slipped 0.2 percent to 112.22 yen, moving back toward Friday’s 3-1/2 year nadir of 109.30 yen. Japanese officials have threatened to intervene if they see yen rises as excessive, though market participants doubt Tokyo will actually step in, given strong opposition from Washington. The yield on benchmark 10-year Japanese government bonds as well as 20-year JGB yields both dropped to record lows on Tuesday as the Brexit fallout pulled more investors into the safety of government debt. Crude oil prices clawed back some of their overnight losses after tumbling nearly 3 percent on Monday. U.S. crude CLc1 added 0.7 percent to $46.68 a barrel after shedding 2.8 percent on Monday, while Brent LCOc1 rose 0.9 percent to $47.56 after skidding 2.6 percent and touching seven-week lows overnight.