U.K.’s flash PMI indices indicate decline in business activity in November, composite index falls to 47.4
European bonds gain on Brexit angst
The European bonds gained on Monday as the recent polls showed the outcome of the referendum is too close to call, raising the possibility that Britain might leave the EU after 43 years of membership in the bloc. The benchmark German 10-year bonds yield, which is inversely proportional to bond price fell 1bps 0.139 pct, French 10-year bunds yield dipped 2bps to 0.508 pct, Italian equivalents tumbled 3bps to 1.462 pct, Spanish 10-year bonds yield inched lower 2bps to 1.562 pct, Portuguese 10-year bonds yield fell 3bps to 3.295 pct, Netherlands 10-year bonds yield dipped 1bps to 0.375 pct and British 10-year bonds yield dipped 1bps to 1.413 pct by 1100 GMT.
According to recent poll conducted by IPSOS concluded most of the respondents believe that a Brexit would lead to a domino effect in the European Union. Mainly, 48 pct of respondent voted that other European nations would also leave if British votes for separation and Europeans think Brexit will harm the EU more than the U.K. Moreover, 4 out of 10 said that they see a reduced European Union in next 4 years and 49 pct of those polled voted in favour of Brexit. Furthermore, 60 pct of Italians, 58pct of French & 42 pct of Germans think the UK will leave and 45 pct said that their own country should also hold a referendum. On the other hand, In a latest EU referendum poll by ICM published in the Sunday Sun, the Brexit side leads by 46 pct to 43 pct and remaining 11 pct are still undecided. While 45 pct said that immigration in United Kingdom is the biggest factor in the vote.
On the other hand, The European bonds have been closely following developments in oil markets because of their impact on inflation expectations, which are well below the European Central Bank's target. Today, crude oil prices jumped by more than 1 pct as a huge wildfire in Canada disrupted its oil sands production and strong Chinese oil imports last month. China’s crude imports rose 7.6 pct y/y in April, the third straight month that crude imports surpassed 30 million tons. The International benchmark Brent futures rose 1.74 pct to $46.16 and West Texas Intermediate (WTI) climbed 1.25 pct to $ 45.22 by 0850 GMT.
"Oil prices held as concerns over the impact of raging fires in Alberta,Canada, on supply from the oil sands projects lingered," said ANZ economists in a research note on Monday.
The markets will now focus on the March industrial production on Thursday (0900 GMT) and Q1 GDP on Friday (0900 GMT). Meanwhile, the pan-European STOXX 600 index was up 1.20 pct and the euro-area blue-chip gauge, the STOXX 50 climbed 1.30 pct. The FTSE 100 Index rose 0.40 pct, the DAX trading 1.78 pct higher and the CAC-40 jumped 1.26 pct by 1100 GMT.
What is a semiconductor? An electrical engineer explains how these critical electronic components work and how they are made