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Sterling falls to new low against the dollar in Asia trade | Sterling falls to new low against the dollar in Asia trade |
(35 minutes later) | |
The pound has hit a new low in Asian trading as concerns about the UK's vote to leave the European Union continue to weigh on investor confidence. | The pound has hit a new low in Asian trading as concerns about the UK's vote to leave the European Union continue to weigh on investor confidence. |
It touched $1.2798 against the dollar on Wednesday, which is a 31-year low. | |
US government bond yields also fell to record lows as investors rushed to put money in perceived safe havens. | |
The falls follow decisions by fund managers, including Standard Life and Aviva, to stop investors withdrawing money from their UK property funds. | |
They said the high levels of uncertainty caused by the referendum had led to investors rushing to pull their money out. | They said the high levels of uncertainty caused by the referendum had led to investors rushing to pull their money out. |
Investor confidence was further undermined by the Bank of England's warning on Tuesday that there was evidence some of the risks it identified related to Brexit were already emerging. | |
Disappointing data on the UK services sector and a decline in US factory orders also fuelled pessimism. | |
'More uncertainty' | |
Financial markets were shaken by the Brexit vote two weeks ago, with trillions of dollars lost from global equity markets and currencies like the pound suffered steep falls. | Financial markets were shaken by the Brexit vote two weeks ago, with trillions of dollars lost from global equity markets and currencies like the pound suffered steep falls. |
They have since recovered some ground on speculation central banks will ramp up stimulus measures to stabilise the markets. | They have since recovered some ground on speculation central banks will ramp up stimulus measures to stabilise the markets. |
However, investors now face more uncertainty after UK Prime Minister David Cameron, who campaigned for the UK to stay in the EU announced his resignation, leading to a sharply contested ballot to replace him as leader of the Conservative Party and PM. | However, investors now face more uncertainty after UK Prime Minister David Cameron, who campaigned for the UK to stay in the EU announced his resignation, leading to a sharply contested ballot to replace him as leader of the Conservative Party and PM. |
As a result, there has been a rush to buy up government debt, another safe haven investment, from certain countries. | |
This includes 10-year US, UK, Swiss and German bonds which have seen their yields at or near their lowest on record. | |
Yields on Australian and Japanese government bonds have also hit record lows. | |
High demand tends to push up bond prices, and when the price of bonds rises their yield falls. | High demand tends to push up bond prices, and when the price of bonds rises their yield falls. |
Asian markets | Asian markets |
Meanwhile, Asian stock markets are falling due to the renewed Brexit concerns. | Meanwhile, Asian stock markets are falling due to the renewed Brexit concerns. |
Japan's benchmark Nikkei 225 has dropped nearly 3% and the broader Topix has shed 2.6% as the yen, another safe haven investment, strengthened against the US dollar. | Japan's benchmark Nikkei 225 has dropped nearly 3% and the broader Topix has shed 2.6% as the yen, another safe haven investment, strengthened against the US dollar. |
South Korea's Kospi fell 2% and Australia's S&P/ASX 200 index is down 1.4%. | South Korea's Kospi fell 2% and Australia's S&P/ASX 200 index is down 1.4%. |
Hong Kong's Hang Seng fell 1.9% and the Shanghai Composite is 0.4% lower. | Hong Kong's Hang Seng fell 1.9% and the Shanghai Composite is 0.4% lower. |
Indonesia, India, Singapore, Malaysia and the Philippines stock markets are closed for holidays. | Indonesia, India, Singapore, Malaysia and the Philippines stock markets are closed for holidays. |