U.S. stocks are moving higher in early trading during a volatile trading week that saw investors taking cues from Brexit developments out of the U.K. and the European Union.
The June 23rd referendum vote in the U.K. to exit the European Union caught investors off guard last week, resulting in a global market selloff last Friday and Monday.
Global stocks have recovered during the middle of this week, boosted by policy easing comments from Bank of England Governor Mark Carney who said growth will slow in approaching months and further interest rate cuts and other measures will be needed.
Economists believe the British central bank could lower its benchmark rate to .25 percent as investors digest economic headwinds for the U.K. in the aftermath of their June 23rd referendum vote to leave the EU.
Expectations of further easing measures from the Bank of Japan have also steadied Asian markets.
Today a majority of economists don’t expect the U.S. Federal Reserve to raise interest rates anytime soon and the delay of an interest rate hike may last until December or next year.
During her testimony to Congress last week, Fed Chair Janet Yellen said that Fed Reserve Committee members are watching global developments closely.
Since the June 23rd Brexit vote, the U.K. has seen 3 credit downgrades from 3 credit agencies.
Yesterday, the S&P Global Ratings firm lowered the credit rating of the European Union to AA from AA+ with a stable outlook, citing the Brexit outcome, uncertainty about cohesion of the EU and adjustments to the primary financial buffers of the EU.
“We think that, going forward, revenue forecasting, long-term capital planning, and adjustments to key financial buffers of the EU will be subject to greater uncertainty” the S&P wrote.
“After the decision by the U.K. electorate to leave the EU as a consequence of the June 23 consultative referendum, we have reassessed our opinion of cohesion within the EU, which we now consider to be a neutral rather than positive rating factor” the S&P wrote.
On Monday U.S. stock markets are closed for the 4th of July holiday.
Next Friday the U. jobs report for June will be released in a shortened trading week.
Written By: Johnathan Schweitzer