Stocks, pound rise after days of ‘Brexit’ losses

United Kingdom shares recovered from the hangover of last week’s Brexit vote, as oil prices rebounded and central bank chiefs and policymakers around the world tried to calm the jitters over the economic fallout of Britain’s vote to leave the European Union.

The FTSE 100 rose 2% at the start of trading on Tuesday moving into positive territory for the first time since the Brexit vote.

USA stock futures are also firming, suggesting markets could open about 1% higher.

Despite the upbeat tone in financial markets, some analysts were sceptical that gains could be sustained.

“Markets are bouncing and can bounce further but the clouds on the horizon are dark, and they’re real”, said Kit Juckes, strategist at Societe General.

Investors seemed to shrug off downgrades to the United Kingdom economy’s credit rating by S&P, Fitch and Moody’s and a post-Brexit warning from chancellor George Osborne on tax increases and spending cuts. Fitch also cut its rating by a notch to AA.

The pound also showed signs of recovery, rising 0.8% against the dollar to $1.3328. The opposition Labour Party remained in a state of chaos as over half of the shadow Cabinet resigned amid calls for leader Corbyn to resign and a no-confidence vote due on Tuesday.

“We are still looking for another 10 percent fall for the pound against the dollar in the coming months as data confirms the economic slowdown and monetary policy expectations increase”, said Jeremy Cook, chief economist at World First, as cited by the BBC.

That led to a five-minute halt while investors analysed the next move. German chancellor Angela Merkel, French President François Hollande and Italy’s PM Matteo Renzi decided against pressing the United Kingdom into a rapid start to its negotiations, but insisted that the European Union will not hold informal talks with the United Kingdom until it triggers Article 50 to leave.

Chancellor George Osborne’s efforts to calm the markets over Brexit proved fruitless as more than £40 billion was wiped off the value of Britain’s biggest companies.

EasyJet shares also plummeted – by 19 percent – following a statement from the airline saying Brexit would contribute to a fall in revenues of up to £28 million (about US$37 million).

In our view this could see Eur/GBP head to 85p or higher, and GBP/USD to possibly as low as $1.25-1.30, with this outlook implying downside for Eur/USD which we wouldn’t be surprised to see trading at $1.08 in the weeks ahead, from this morning’s opening level of $1.1070.

The insurer said its “central-planning scenario” before the vote was for a 50 percent chance for the U.K.to leave and that it had taken a number of actions to reduce risk in its funds, including reducing equity holdings.

Shares in European airline Ryanair are up 2.8% premarket. Shares fell 18.5% to 1,070p. Nike will report earnings after the close.

Earlier, Asian markets struggled to shrug off the Brexit gloom and ended the session flat, Japan’s Nikkei closed 0.1% higher, while Hong Kong’s Hang Seng was 0.3% down.

Some investors took refuge in companies producing gold, a safe-haven asset, with Fresnillo surging 9 percent to a three-year high and Randgold Resources gaining 8.5 percent.The FTSE 100 .ftse fell 2 percent to 6,017.17 points by 1137 GMT.