BRITAIN LEADS GLOBAL STOCK RALLY -- POUND SURGES 2% -- SAFE HAVEN ASSETS LIKE BONDS AND GOLD SELL OFF -- WEAK DOLLAR BOOSTS COPPER AND OIL -- S&P 500 GIVES BACK HALF ITS GAINS BY THE CLOSE
UK LEADS GLOBAL RALLY ... Stocks around the world started the week on a strong note which appears to be tied to shifting sentiment in Britain. Chart 1 shows the British Pound surging more than 2% for its biggest gain in years. British stocks are sharply higher as well. Chart 2 shows the MSCI United Kingdom iShares (EWU) up more than 4% in Monday trading. Eurozone stocks were sharply higher, as were shares in developed and emerging markets. EAFE iShares were up close to 3% while emerging markets are seeing gains of nearly 2%. Safe haven Treasuries were sold as the 10-year yield jumped 5 basis points. A falling dollar boosted economically-sensitive commodities like copper and oil. Safe haven gold sold off. Renewed optimism was also shown by a -4.5% drop in the VIX Index which pushed it further below 20. U.S. stock indexes were up 1% for most of the day, but ended in the lower end of the day's trading range. Chart 3 shows the S&P 500 ending the day 12 points (0.58%) higher after giving back half of its earlier gains. It closed just barely above its 50-day average. We'll be following the various markets in more depth as the week wears on. The British vote results should be in by Thursday evening. That should make Friday a very interesting day.
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Chart 1
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Chart 2
