Global stocks rebound as demand for haven assets cool

Global stocks rebounded from a four-week low and commodities advanced with the pound as campaigning in Britain's referendum on European Union membership was suspended for a second day.

German bonds fell as demand for haven assets cooled. All 10 industry groups in the MSCI All-Country World Index advanced, while South Africa’s rand and Russia’s ruble led gains in emerging-market currencies.

US crude snapped a six-day losing streak and industrial metals rallied. Sterling rebounded from a two-month low as an opinion poll on voter intentions in next week’s referendum was delayed.

Ten-year bonds in Japan and the UK declined for the first time in more than a week.Anxiety stemming from a so-called Brexit curbed demand for riskier assets over the past week, wiping more than $2 trillion from the value of global equities and sending bond yields to record lows in the UK, Germany and Japan.

Campaigning for the referendum was halted through Friday following the killing of Jo Cox, a member of Parliament who was a proponent of Britain remaining in the EU.

“The halt in campaigning may just take Brexit off the headlines momentarily, and that may have given an opportunity to just to see a little bit of a retracement in a comparatively quieter environment,” said Orlando Green, a rates strategist at Credit Agricole SA’s corporate and investment-banking unit in London. “We’ll see a choppy environment as we head toward the referendum.”

Stocks clawed back some of their losses on Friday in the worst week for equities in more than a month as polls showed Britons favored leaving the EU. Federal Reserve chair Janet Yellen cited the referendum as a factor in the central bank's decision to keep interest rates on hold Wednesday and the Bank of England the following day warned a Brexit vote could hurt global markets and the world economy.

Stocks

The MSCI index of global equities rose 0.7 per cent at 6:15 a.m. in New York, trimming the week's drop 1.6 per cent. The Stoxx Europe 600 Index rose 1.4 per cent, leaving down 1.9 per cent in the five-day period. European lenders rallied the most on Friday, buoyed by Italian banks. Ericsson AB lost 1.9 per cent after saying it received a request from US authorities in 2013 to answer questions relating to its operations. A report earlier said the company is being investigated on suspicion of corruption.Futures on the SandP 500 were little changed, after equities Thursday snapped their longest losing streak since February.

Data on Friday are forecast to show US housing starts declined in May after surging a month earlier.The odds of a move on borrowing costs have fallen to 4 per cent for July and less than 40 per cent for as late as February 2017, after the Federal Reserve this week scaled back its projections for increases.

Currencies

The pound strengthened 0.5 per cent, after erasing a slump of more than 1.3 per cent in the last session. Odds on the UK leaving the EU slid to 36 per cent after hitting a record 44 per cent on Thursday, according to Oddschecker calculations based on bookmakers’ quotes.

"If you do see uncertainty, that typically will drive voters to the status quo," said Karl Schamotta, director of foreign-exchange research and strategy in Toronto at Cambridge Global Payments, which hedges currencies for companies. "We're seeing a trade that's entirely too crowded -- at the end of the day, the market expectation remains that we will see a stay vote."

Bloomberg