HONG KONG: Asian markets mostly sank again Tuesday, extending a recent sell-off following US declines, while fresh opinion polls fanned fears that Britain will vote to leave the European Union next week.
With policy meetings of the US and Japanese central banks this week, investors are staying cautious, analysts said, while Chinese traders are waiting to see if index compiler MSCI decides to include Shanghai in its global benchmarks list.
The Federal Reserve will conclude a two-day meeting Wednesday and while it is not expected to hike interest rates for several months, investors hope it will give some guidance on monetary policy. Opinion is divided on whether the Bank of Japan will add to its stimulus when it finishes its own gathering Thursday.
With just over a week to go until Britain’s referendum, a series of polls have put the pro-leave camp in front, raising the possibility that its four-decade ties to the bloc could be cut.
The prospect of one of the biggest economies in the EU breaking away has led to warnings of a new wave of world market turmoil as they struggle to recover from the panic that wiped trillions off valuations at the start of the year.
“To survive and thrive as a trader we simply have to adjust to volatility,” Chris Weston, chief market strategist at IG Ltd. in Melbourne, said in an e-mail to clients.
“The key consideration here is what happens if we do actually see a ‘leave’ vote and a sudden shock to markets. What have central banks got in the kitty this time around? The answer, of course, is significantly less than in prior cycles,” he said, according to Bloomberg News.
