On Tuesday, U.S. stock market showed stability following sharp declines in the British pound and global market after the U.K. voted to leave the European Union last Thursday. Dow Jones Industrial Average increased 0.78% to 17,274.40. S&P 500 rose 0.89% to 2,018.36. NASDAQ Composite up 1.30% to 4,654.10. Today’s gains following two day losses of $3 trillion from global stock markets.
The Brexit vote has shaken global markets, as investors worry about a long list of uncertainties. U.K. and the European Union must find a way to negotiate the complex separation process, and it was uncertain whether either entity could survive without further turmoil.
The pound increased 0.5% against the dollar to $1.3307, even it remained almost three-decade low reached Monday after a steep selloff following the vote. The Stoxx Europe 600 increased 2.6%, having tumbled approximately 11% over the last two trading days. Financial stocks led the gains in Europe stock market.
“Everyone’s dipping their toe back into the water. After you see two drastic days as you did, people start saying it’s time to buy,” said Frank Ingarra, head trader at NorthCoast Asset Management. Even as the stock-market leveled off, he added that the rhetoric around the U.K.’s departure from the European Union is likely to create more volatility in the coming weeks and months. “Volatility is here to stay, but I think we’ll find some buying opportunities in this more volatile period,” he said.
In Asia, Japanese officials sought once again on Tuesday to prevent the strengthening of the yen, an asset that many currency traders see as a haven from troubles in Europe. A stronger yen is usually seen in Japan as bad for corporate profits and a source of deflation. Finance Minister Taro Aso said that the authorities were ready to respond if necessary. “Financial market stability is extremely important,” he stated after a regular cabinet meeting, although he added that markets were “somewhat calmer this week.”