European and Asian stock markets rebounded Wednesday, after heavy losses in recent sessions caused largely by the prospect of Britain voting to leave the European Union.
Markets were volatile on uncertainty over the outlook for the global economy as the Federal Reserve looks set to postpone hiking US interest rates.
Around 1045 GMT, London’s benchmark FTSE 100 index had jumped 1.0 per cent compared with Tuesday’s close.
In the Eurozone, Frankfurt’s DAX 30 index rallied 1.2 per cent and the Paris CAC 40 won 1.5 per cent in value.
Asian stocks also rebounded Wednesday after a global sell-off that saw London slump 2.0 per cent Tuesday on Brexit fears.
“After a torrid few days for markets, European investors are bargain hunting, having concluded the market is oversold,” said head of investment at stockbroker Interactive Investor Rebecca O’Keeffe.
“Although this may prove to be a very astute move, with volatility and the possibility of negative news still high and the EU referendum genuinely too close to call, the upside potential for… stocks is likely to remain limited until the result is known.”
Ahead of the June 23 referendum, investors are keeping a close watch on central bank meetings this week in the United States and Japan.
In foreign exchange Wednesday, the pound fought back to rise against the dollar and euro.
“The pound is in recovery mode on Wednesday ahead of this evening’s Fed meeting,” said the research director of City Index Kathleen Brooks.
“This is likely just a pause after another bruising day for risk assets on Tuesday. The yield on German 10-year government debt, after falling into negative territory for the first time yesterday, has climbed back above zero per cent. However, sentiment remains fragile,” she added in a note to clients.
Investors from the Americas to Asia have been piling into safe haven investments such as the yen, gold and bonds over the past week as a succession of opinion polls put Britain’s “Leave” camp in front ahead of the EU referendum.
However the latest poll, by ComRes, showed support for remaining at 46 per cent and the pro-Brexit side on 45 per cent.
This contrasts with a result from the same pollster just one month earlier in which the pro-remain side had an 11 point lead.
The prospect of one of the biggest economies leaving the bloc has led to warnings of a bloodbath on global trading floors, just as dealers struggle to recover from a China-fuelled rout that wiped out trillions of dollars at the start of the year.
Worries about the impact of an exit sent the yield of rock-solid 10-year German debt into negative territory Tuesday, for the first time in history as dealers fled to safe investments.