Actually, the UK faces economic, constitutional and political crisis. While Great Britain attempts to define its future relationship with the EU, the prospects of the Pound and the Euro are gloomy. Global stock market are slowly recovering after the sharp decline caused by the outcome of the UK referendum. During the past two sessions: last Friday and this Monday, the world indices suffered dramatic losses, resulted in the reduction of capitalization of the global stock markets by 3 trillion USD.
Although safe-haven assets, such as the Yen and gold are still in high demand among investors, some of them demonstrate appetite for risk and buy risky assets.
At the closing session on Tuesday stock index Dow Jones Industrial Average rose by 1.6%, S&P500 – by 1.8%, Nasdaq Composite – by 2.1%.
Since the beginning of the trading day on Wednesday, the world stocks indices have also been in positive territory. European index StoxxEurope600 rose by 3.0% after the fall by almost 11% in the last two sessions last Friday and this Monday.
Index FTSE100 at the London stock exchange is already above the level of the beginning of this month. US stock indices are not doing that good; however, positive dynamics in the US indices can be observed for the second consecutive session.
It is likely that the impact of the UK referendum in will be not so strong in the United States, as in Europe and the UK.
Fed Governor Jerome Powell said on Wednesday that the UK’s decision to exit from the EU has increased risks to the fragile global economy. Although he did not express the opinion of the Fed on the results of the referendum, he made it clear that the US Central Bank is in no hurry to raise interest rates. This fact shall have a positive impact on the US stock markets.
Volatility in the world markets will continue, until the process of separation in Europe is terminated; however, it also opens up new trading opportunities. If recovery of the markets continues, stock indices will go up, giving a chance of gaining high profit.