As the view on the Brexit intensified, Asian stocks performed better. During the previous sessions, equities in China, Japan and other emerging countries in Asia advanced, however, the gains were seen to be limited.
An Asian market analyst saw the fear brought by the Brexit vote, nevertheless, stocks caught some breathing space. Adding to this, a market strategist stated that we still have three polls on the UK referendum before the vote, and another shift back to 'Brexit' will see risk appetite disappear. Thus, despite a positive performance in the overnight markets, Asian stocks will continue to trade cautiously.
The financial market has been cautious of the possible effects that the Brexit vote will bring after the referendum this Thursday. Investors couldn’t deny the risks involved as the market might lose momentum during the waiting process. The previous bullish performance of stocks was likely caused by the belief of some investors that Britain will stay in the European Union to avoid the political and economic turbulence.
It can’t be helped, but most of the market players pay attention to the uncertainties, which could rise before and after the vote. Evidently, the Federal Reserve paused its intention to increase the interest rate as the market was bombarded by the EU referendum sentiments. However, the doors are still open for a rate hike next month, given that gross domestic product significantly rallied in the second quarter.
Based on the most recent polls, the vote to remain can boost risk appetite and have weighed on safe haven assets. Safe-haven assets are expected to maintain their value or increase in times of market volatility.
An analyst noted that the odds of a Leave victory implied by betting market odds are much more modest than the polls imply at about 25 percent. Last week, the bets on Brexit winning slid to 43 percent. Although, the recent events were believed to be favorable for Britain to stay in the EU, more polls are still coming a day before the decision and the market volatility might start anytime soon.
Earlier today, Australia’s S&P 500 and Chinas’s Shanghai Composite Index advanced 0.1 percent and 0.4 percent respectively. Hong Kong’s Hang Seng index added 0.3 percent and South Korea’s KOSPI went up 0.4 percent.
Meanwhile, Taiwan weighted lost 0.1 percent, while the Nikkei 225 was down 0.64 percent after the strength of the yen. The Japanese currency went stronger over the April minutes released by the Bank of Japan, where the global financial risks brought by the narrow growth of overseas economies were stressed.
Separately, the U.S. dollar moved lower after the previous gains as Fed Chairwoman indicated little chance of a rate hike soon. Gold futures went down while oil prices traded above $50 as crude inventories dropped last week.