Investors look for new signs of Brexit fallout
U.S. investors braced for additional Brexit fallout Sunday, watching for any signs of new financial turbulence as the new week's opening of Asia and Europe stock and currency markets neared.
Asian and European officials, meanwhile, hoped to calm the contagion that sent markets around the globe sharply lower on Friday after a United Kingdom referendum endorsed leaving the European Union.
Senior members of Japan's Finance Ministry, Financial Services Agency and the Bank of Japan held a Saturday afternoon meeting on the economic future. Afterward, Masayoshi Amamiya, a Bank of Japan executive director, said "The first and foremost [issue] is to secure the stability of the market while taking all possible measures to sustain liquidity [monetary supply]," The Japan News reported Sunday.
One potential move could be further monetary easing by the Bank of Japan. Hiroshi Nakaso, the bank's deputy governor, said on Friday that "in order to realize the aim of stabilizing the commodity price, additional easing measures will be taken, if necessary," according to the Japan Times report.
However, Japan already has negative interest rates, having set a minus 0.1% rate in January on on some deposits that banks place at Asian nation's central bank. That would make further easing difficult.
Asia may escape major direct economic impact from Brexit because a relatively small share of the region's exports go to the United Kingdom, the Asia edition of The Wall Street Journal reported Sunday.
Chinese Finance Minister Lou Jiwei, speaking during the first annual meeting of the Asian Infrastructure Investment Bank in Beijing over the weekend, said the Brexit vote "will cast a shadow over the global economy," Reuters reported.
"The knee-jerk reaction from the market is probably a bit excessive and needs to calm down and take an objective view," Lou added.
But Sean Taylor, chief investment officer for Asia Pacific at Deutsche Asset Management in Hong Kong, told the Journal that financial markets "could get even more oversold" in the coming days before investors start bargain hunting and buying again.
George Soros, the investor who gained global fame and a billion-dollar fortune by speculating against the British pound in 1992, predicted the disintegration of the European Union is "practically irreversible" in a downbeat Saturday post at Project Syndicate.
"Financial markets worldwide are likely to remain in turmoil as the long, complicated process of [the United Kingdom's] economic divorce from the EU is negotiated," Soros also forecast.
In the United Kingdom, alarm over the impact of a break from the European Union spurred more than 3 million people to sign an official online petition calling for a re-vote of Brexit referendum. The volume, enough to put the issue up for a government debate, generated so much electronic traffic that Parliament's website temporarily crashed on Saturday.
Meanwhile, the BBC reported Sunday that Business Secretary Sajid Javid plans a meeting in the coming week with British business leaders. He plans to say the United Kingdom's economic fundamentals are strong enough to withstand short-term volatility of financial and currency markets, the BBC reported.
"There's no need to be panicking," Javid said.
Trying to avoid such an eventuality, Britain’s Treasury said finance minister George Osborne planned an early Monday statement “to provide reassurance about financial and economic stability” before the London Stock Exchange opens, the Associated Press reported.
Follow Paste BN reporter Kevin McCoy on Twitter: @kmccoynyc