Global Markets Mixed as Caution Drives Markets on Referendum Eve
Major European indexes were trading with a positive bias on June 22. The Markets seemed to be betting on Britain remaining in the European Union on the eve of the June 23 UK referendum.
The Health Care Select Sector SPDR ETF (XLV) and the SPDR S&P Biotech ETF (XBI) were among the few gainers in an otherwise negatively biased market. XLV and XBI rose by 0.29% and 0.21%, respectively.
According to Goldman Sachs, in the flat market scenario, high operating leverage companies will outperform the Markets.
According to Goldman Sachs, its top stock picks will outperform in the flat market scenario since they have higher operating leverages.
In this flat Market, Goldman Sachs said there are still investment strategies that can outperform the Market.
Goldman Sachs recently spoke to its clients about US GDP growth in the second half of 2016. US (IVV) economic growth remained under pressure in the first quarter of the year.
According to Goldman Sachs, the S&P 500 index (SPXL) will be flat for the rest of the year. The recent movement of the index is mainly due to Market sentiments.
According to Lipper funds flow data, investment-grade bond funds saw net inflows of $499 million during the week ending June 15.
In the week ending June 17, 2016, investment-grade corporate bonds worth $5.7 billion were issued in the primary market.
For the week ending June 17, investment-grade bond yields rose marginally by 1 basis point and ended at 2.99%.
Investment-grade bond yields rose marginally for the week ending June 17. Corporate bond yields, as measured by the BofA Merrill Lynch US Corporate Master Effective Yield, rose 1 basis point on June 17 to end at 2.99%.
Critical Asian indexes (AAXJ) were trading on a mixed note on June 21, 2016. The Asian markets’ rise was led by the Japanese Nikkei 225 index.
Major Asian currencies had a mixed performance against the US dollar on June 21, 2016.
The British pound gained on the US dollar with speculations that the British currency could rally if the Brexit does not take place.
Over the last month, the UK referendum to decide on whether the UK should stay in the European Union or not has taken center stage in the Market.
Brokerage firm Keefe, Bruyette & Woods estimates that US banks’ (XLF) earnings would be impacted by 1%–6% in 2016 if the Brexit comes through this week.
If a Brexit occurs, banks would move their offices out of the United Kingdom. They plan to cut down their staff count at offices in the United Kingdom.
JPMorgan Chase, Morgan Stanley, and Goldman Sachs are the most vulnerable to a Brexit. They generate a large portion of their income from the United Kingdom.
The outcome of the Brexit could have global repercussions. It could impact global currencies and send shivers through financial markets across the world.
According to the People’s Bank of China, new loans issued by Chinese banks rose to 985.5 billion yuan ($150 billion) in May from 555.6 billion yuan ($85.2 billion) in the previous month.