Stock, oil prices gain as Brexit jitters abate
NEW YORK, June 29 (Reuters) – Stock markets around the world rebounded for the second straight day on Wednesday as fears about last week’s Brexit vote eased and investors wagered central banks would ultimately ride to the rescue with more stimulus.
Fading concerns over Britain’s vote to exit the European Union bolstered oil prices and helped boost energy shares both in Europe and in the United States.
Wall Street recouped more than half of its losses from the two-day equities rout sparked by the British referendum, and the S&P 500 index finished positive for the year.
"It’s not the end of the world and it never was the end of the world and to have these kinds of reactions was ridiculous," said Jeff Weniger, senior portfolio strategist at BMO Private Bank in Chicago.
The Dow Jones industrial average rose 284.96 points, or 1.64 percent, to close at 17,694.68, the S&P 500 gained 34.68 points, or 1.7 percent, to finish at 2,070.77 and the Nasdaq Composite added 87.38 points, or 1.86 percent, to end at 4,779.25.
All 10 major S&P indexes gained, led by a 2.3 percent jump in the energy index.
The chance of more monetary stimulus helped stocks worldwide.
Speaking on Tuesday, Governor Jerome Powell, the first Federal Reserve policymaker to comment since the vote, said Brexit had shifted global risks "to the downside," reinforcing expectations the Fed will not hike U.S. rates this year and could even cut.
"There are very reasonable expectations from central banks globally, especially from the U.S. Federal Reserve, the ECB and the BOE, to provide more liquidity, guidance and clarity to support markets," said Stephen Wood, chief market strategist for Russell Investments in New York.
The MSCI world equity index of shares in 45 nations rose 2.19 percent, its best two-day rally in 10 months.
Europe’s broad FTSEurofirst 300 index gained 3 percent. Higher oil prices and the chance of more monetary stimulus helped Britain’s FTSE 100 erase all its post-Brexit losses.
UK and European banks, a focus of concern since Britain shocked global markets by voting to leave the European Union, extended a recovery from two days of trading that had knocked almost 40 percent off shares in Barclays and RBS .
Oil prices jumped more than 4 percent, with Brent crude rising above the $50 a barrel mark, after a larger-than-expected drawdown in U.S. crude inventories. The potential for an oil workers’ strike in Norway and a crisis in Venezuela’s energy sector added support to crude futures.
U.S. crude oil futures settled up 4.24 percent, or $2.03, higher at $49.88, while Brent crude rose 4.2 percent, or $2.03, at $50.61 per barrel. Both pulled back after the settlement, but were still up more than 3 percent.
The U.S. dollar slipped against the euro and sterling for a second straight day on potential profit-taking and a rebound in risk appetite.
Sterling, which suffered its biggest one-day fall in modern history on Friday, was up 0.99 percent against the greenback at $1.3468.
In the bond market, U.S. Treasury debt prices fell as investors reduced bond holdings on the rebound in stocks and commodities.
Benchmark 10-year Treasuries were down 14/32 in price with a yield of 1.5070 percent.
"The market is taking a break from the Brexit volatility," said Eric Stein, co-director of the global income group at Eaton Vance in Boston.
Spot gold was up 0.43 percent $1,318.06 an ounce.