U.S. stocks close up as Brexit worries ease

LONDON – European stocks have risen for the first time in three days as investors took advantage of cheaper, Brexit-bashed assets hammered by some of the biggest falls since the 2008 collapse of Lehman Brothers.

European shares rose on Wednesday, as jitters over Britain’s vote to leave the European Union eased, with higher oil prices and the chance of more monetary stimulus also helping markets.

European shares were up 2.4 per cent, clawing back some of their 10 per cent loss the wake of the UK’s vote in favour of Brexit on Friday.

Anslysts remain unconvinced the rally is sustainable.

At Wednesday’s close, the Dow Jones Industrial Average was up 285 points at 17,695, the S&P 500 rose 35 points to 2,071, the Nasdaq jumped 87 points to 4,779, and the Russell 2000 was up 24 points at 1,132.

For investors hoping improved profits would help push stock prices to record highs for the first time in 2016, Brexit has muddied the picture. Heating oil fell 3 cents to $1.43 a gallon.

The Hang Seng index rose 1.3 per cent, to 20,436.12 points, while the China Enterprises Index gained 0.4 per cent to 8,571.44.

The dividend-heavy S&P 500 utilities sector, which has attracted investors looking for bond-like stocks, is up 21% so far this year.

Sterling, down as much as 9 per cent in trade-weighted terms on Monday compared to before the vote results, stood at $1.3397, compared to the 31-year low of $1.3122.

Safe havens like gold slipped after strong gains in recent days. The Nasdaq crossed 2 billion shares.

The data “reminded people that the USA economy is still in very good shape and sort of refocused everybody on the bigger picture, and let’s step back from the edge with regard to Brexit”, said John Traynor, chief investment officer of People’s United Wealth Management in Bridgeport, Connecticut.

Uncertainty over the exit is expected to fuel more volatility in the markets in the weeks ahead.

British voters chose to leave the European Union in a referendum on Thursday.

“I think this is a short-lived rally”, said Paul Nolte, portfolio manager as Kingsview Asset Management.

In the bond market, the US 30-year Treasury yield approached record lows on bets of more unconventional stimulus measures from major central banks. “If oil prices firm, that seems to be giving a little bit more breathing room that Brexit and everything else isn’t going to just tank the global economy”. Specifically, August-dated crude futures have surrendered 2.1% at $48.82 per barrel amid an uptick in Nigerian oil output, and weekly jobless claims rose slightly more than expected.

The S&P financial stocks index, which was hit the most since the referendum, was up 1.13 per cent.

“Stock markets may find it hard to return immediately to the levels seen before last week’s vote with buyers being wary about being too aggressive in what may yet be just another volatile swing”.

The main indexes looked set to book monthly losses but were modestly higher over the quarter and on Wednesday turned positive on a year-to-date basis. In Asia, the Nikkei 225 posted modest gains overnight, while the Shanghai composite slipped about 0.1 percent.