-Pull up the gates: Three – count ‘em three – asset managers have frozen withdrawals from real-estate funds with almost 9.1 billion pounds ($12 billion) worth of assets following a flurry of redemptions post-Brexit. M&G Investments became the third property fund to pull up the gates, following similar moves by Aviva Investors and Standard Life Investment. The attempts to stem redemptions have brought back financial crisis memories for some, while analysts at CreditSights Inc. point out that no one knows how much further property prices need to fall in order to lure investors back into the market. Others have been worrying about U.K. bank exposure to commercial property with the Bank of England noting in its Financial Stability Report released yesterday that the country’s lenders have «material exposure» to the sector. So far the consensus seems to be that well-capitalized banks can withstand a reasonable fall in property prices, but that doesn’t mean that they won’t be affected by recession as one of the great pillars of the British economy begins to crumble.
-How low can bond yields go? Very low, apparently. Global government bond yields are plunging to fresh depths with Japan’s 20-year yield dropping below zero for the first time to reach minus 0.005 percent, while the 10-year U.S. Treasury reached a(nother) record low yield of 1.3397 percent. While much of the rush into bonds has been pinned on Brexit jitters, others are looking at the longer-term trend of central bank actions that have herded investors into sovereign debt. Mohamed El-Erian reckons that record low U.S. Treasury yields say more about Europe and Japan than anything else. Stock markets, meanwhile, continued their sell-off with the MSCI All Country World Index down 0.97 percent as of 4:56 a.m. New York time. The Stoxx Europe 600 Index declined 1.14 percent as of 4:58 a.m. ET while futures on the S&P 500 Index also point to a down day.
-Heavy metals: Gold bugs are perhaps one of the few investors enjoying themselves this week as the price of the precious metal has reached a two-year high on safe haven demand. Gold for immediate delivery rose as much as 1.1 percent to $1,371.39 an ounce in London, the highest level since March 2014, and traded at $1,367.39 by 4:03 a.m ET. UBS AG Strategist Joni Teves figures the metal has further to go. We’re in the early stages of the «next bull run» she said in a note lifting the bank’s short-term price target to $1,400 from $1,250. Also in precious metals, it seems China’s Great Ball of Money has rolled into silver with day traders in the country said to be behind the shiny stuff’s biggest two-day rally in five years. Silver was up as much as 2.4 percent to $20.4103 per ounce in early trading on Wednesday, and traded at $20.1995 as of 4:07 a.m. ET.
-Pound gets pounded, again: The British pound has taken a further beating overnight. At one point it dropped to $1.28, its lowest level in 31 years, but then steadied to trade around $1.29. Investors have been dumping the pound following Britain’s vote to leave the European Union on June 23, which has led to a huge amount of political and economic uncertainty in the country. The pound has dropped as much as 15% since referendum day, when it was trading at $1.50 Many analysts expect the pound to fall further as the U.K. economy slows. Kit Juckes, a strategist at Societe Generale, said his bank’s medium term target for sterling is $1.23.
– International markets overview: There’s an overall negative tone in stock markets this morning and investors are turning to safe-haven assets like gold, which is trading at its highest level since early 2014. U.S. stock futures are all slipping and all major European markets are dropping in early trading. In London, mining stocks are surging, but shares in supermarket companies and home builders are on the ropes. Shares in one London-traded miner, Fresnillo, are about 5% higher. Its shares have rallied by about 60% since Britain voted to leave the EU. Companies mining commodities priced in dollars are getting a boost from the falling pound.Asian stock markets ended the day with mixed results. The Nikkei plunged during the day but then recovered a bit, closing with a loss of 1.9%.
– Following the Fed: The U.S. Federal Reserve is releasing the minutes from its latest monetary policy meeting at 2 p.m. ET. The meeting took place in the middle of June. During that meeting, the central bank decided to keep interest rates steady, in part due to concerns about the upcoming Brexit vote in the U.K. Sweden’s central bank cut its 2017 growth forecast on Wednesday and pushed back the timing of a future rate hike, citing uncertainty about the economic outlook sparked by the U.K. vote.
-Ban on short selling: Italian market regulators have temporarily banned short selling of shares in Banca Monte dei Paschi di Siena. Italian bank stocks have been crushed this year by growing concern over bad debts. Banca Monte dei Paschi di Siena has dropped from above 86 euros in 2007 to around 0.29 euros per share.
– Tuesday market recap: It was a negative day in the markets on Tuesday. The Dow Jones industrial average dropped 0.6%, the S&P 500 declined 0.7% and the Nasdaq dropped 0.8%.