World stocks poised for
worst month since January
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[June 30, 2016]
By Vikram Subhedar
(Reuters) - Global stocks were set for their worst monthly performance
since January, with renewed concerns over global growth forcing European
shares <.STOXX> and oil prices onto the back foot again following two
The MSCI All-Country World index <.MIWD00000PUS> was little changed on
the day, but is set to end the month down 2.5 percent, its worst month
since a troubled start to the year.
Worries that a weaker Chinese yuan could spark deflation, seen as a key
reason for the worst beginning to the year for global stocks, were
reignited after Reuters reported that China's central bank was willing
to let the currency fall further.
"Since the beginning of the year investors have faced a series of macro
changes to the investment landscape," said Sean Darby, chief global
equity strategist at Jefferies, adding that Britain's decision to leave
the European Union last week was only the most recent shock to investor
The two-day selloff in the aftermath of last week's vote wiped more than
$3 trillion off the value of global stocks.
"No doubt global growth will take a short term hit, but it is not going
to result in a credit crisis," said Darby.
Bond markets see Brexit as another significant blow to the world economy
with German and Japanese benchmark 10-year government debt yields both
falling to historic lows below zero over the past week.
On stock markets, European shares <.STOXX> were flat, while the FTSE 100
<.FTSE> was off 0.1 percent in early trading with financials the biggest
drag on both indexes.
Shares of UK and European banks <.SX7P>, a center of concern since
Britain shocked global financial markets on Friday, have been the
hardest hit during the recent sell-off and are the worst performing
sectors this year in their respective markets.
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Traders work at their desks in front of the German share price
index, DAX board, at the stock exchange in Frankfurt, Germany, June
24, 2016 after Britain voted to leave the European Union in the EU
BREXIT referendum. REUTERS/Ralph Orlowski
currencies, sterling <GBP=D4> was up 0.2 percent, putting distance between a
31-year trough of $1.3122 touched on Monday. It has still lost more than 6
percent in the quarter.
The euro, another casualty in the days after Brexit, fetched$1.1111 after
reaching $1.0912 on Friday, its lowest since March.
Crude oil prices retraced some of their gains from Wednesday's sharp rally as
fears over strike outages in Norway abated.
Brent crude <LCOc1> fell 0.9 percent at $50.10 a barrel after jumping more than
4 percent overnight, thanks to a larger-than-expected drawdown in U.S. crude
Oil has mostly recovered what it lost after the Brexit shock. For the quarter,
Brent has risen 26 percent on hopes that declining production in some countries
would ease a global glut.
(Editing by Alexander Smith)
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