NEW YORK: European stocks rose Wednesday and the pound clawed higher on the eve of Britain’s Brexit referendum as polls pointed to a razor-close outcome.
London’s FTSE 100 index forged ahead, closing up 0.6 percent, as the clock ticked down to the start of balloting to decide Britain’s future in the European Union, with fears that an exit vote will wreak havoc in markets.
Bourses in Paris and Frankfurt also gained, but US stocks finished lower, tilting into the red at midday as two polls put the “Leave” side marginally ahead.
“Most economists on both sides of the pond insist that a ‘Leave’ vote from the EU would disrupt business as usual in Great Britain, the EU, here at home and elsewhere in the world,” Mark Vickery, of Zacks Investment Research, said in a note to clients.
“A vote to remain is seen as a near-term positive for markets here and abroad.”
Most polls earlier this week showed gains for the “Remain” camp that some experts attributed to a reaction after the violent assassination of pro-EU lawmaker Jo Cox.
But two polls Wednesday showed the “Leave” side with the slimmest of leads.
Yet bookmakers were giving a more decisive edge to the “Remain” camp.
“The market is clearly positioned for the ‘Remain’ side to win and that’s going to be the conventional wisdom unless we have a huge surprise tomorrow,” said Boris Schlossberg of BK Asset Management.
Rebecca O’Keeffe, head of investment at online broker Interactive Investor, questioned whether investors may be proving too confident.
“With less than 24 hours before voting starts, markets are now pricing in virtually no risk of an exit vote,” she said.
That “begs the question as to whether the euphoria is being overdone and how much upside still exists for investors — or whether this is irrational exuberance and investors are ignoring the risks?”
