Asia Stocks Fall; Yen Rises and Pound Hits New 31-Year Low
Asian stocks tumbled on Wednesday, and the pound fell to a 31-year low against the dollar, as worries about Brexit continued to hound global investors.
Government bond yields fell to new records, and gold rose as investors sought a safe home for their assets.
The pound was recently down 0.92% against the dollar at $1.2902. Earlier it touched $1.2798, the lowest point since June 1985.
The U.K. currency has fallen about 13% since just before the outcome of the Brexit vote on June 24. HSBC economists recently predicted an exchange rate of $1.25 by the third quarter and $1.20 by year end.
Towards the end of the trading day the Nikkei 225 had plunged 2.59% to 15,263.87, with exporters including Mazda Motor (MZDAF) and Fujitsu (FJTSY) leading the decliners. The stocks were down well over 7% and 6%, respectively.
Japanese equities have become one of the major victims of the Brexit decision, as the consequent surge in the yen cripples exporters. The dollar was down 0.61% against the yen at ¥101.1200.
In Hong Kong the Hang Seng was down 1.57% at 20,428.47, with casino company Sands China the biggest loser.
In Sydney the S&P/ASX 200 was down 0.87% at 5,182.6.
On mainland China the CSI 300 composite index held up, edging down just 0.05% to 3,205.72.
S&P 500 mini futures were down 0.28% and FTSE 100 futures were down 0.18%.
Brent crude was recently up 0.21% at $48.06 per barrel.
Gold rose 1.04% to $1,370.60 an ounce.
Ten-year U.S. government bond yields fell to a record low of 1.3432% and were recently down 2 basis points at 1.36%.
The yield on the Japanese equivalent dropped to a record low of minus 0.27%, down 2 basis points, while the Australian 10-year bond hit a record low 1.84% and was recently down 8 basis points at 1.86%.
On Tuesday Bank of England Governor Mark Carney said fears about the economic impact of Brexit had already begun to crystallize as the central bank released lenders from the obligation to build capital for difficult times. It said the move would free up £150 billion ($193.5 billion) for lending.
Carney highlighted real estate as a particular trouble spot. On Tuesday property funds of Prudential and Aviva followed Standard Life in temporarily halting redemptions in order to avoid fire-sales of their assets.