Trump, Brexit spook markets

Investors bailed out of sterling and stock markets in Europe and Asia yesterday, seeking shelter in gold and the Japanese yen as Brexit uncertainty spooked markets.

Lack of clarity coming from US Presidential incumbent Donald Trump also had traders jittery, just four days before his inauguration.

The dollar rose, except against the yen, rebounding after its worst week since November.

“(The movement) shows that people are looking ahead this week with Trump’s inauguration and discussions on Brexit. There is a lot of uncertainty moving forward,” said Brian Lan, managing director at Singapore-based gold dealer GoldSilver Central

But the main mover was sterling, a day before a speech by British Prime Minister Theresa May in which media reports say she will set the scene for an exit from the EU that will see Britain lose access to the bloc’s single market.

The pound fell to $1.1983 in thin early Asian trade, its weakest against the dollar in 32 years.

The fall in sterling, which makes UK exports cheaper, has contributed to an unprecedented 14-day rally in the blue-chip FTSE 100 stock index.

However, the index was fractionally lower yesterday, though still outperforming falling European markets.

Sterling last traded at $1.2025, down 1.2% on the day. The euro was up 0.8% at 88.12 pence, while the yen was up 1.8% at 137.05 to the pound.

Gold, a perennial safe-haven investment, rose 0.4% to $1,201 an ounce. – Reuters