TORONTO – Uncertainty over whether Britain will vote to leave the European Union later this month drove North American stock markets lower on Monday as traders priced in a possible exit.
In Toronto, the S&P/TSX composite fell 43.66 points to 13,993.88, registering declines in all sectors except materials and metals and mining.
It was the same sentiment in New York, as Wall Street ended lower for a third consecutive trading day. The Dow Jones industrials was off 132.86 points at 17,732.48, while the broader S&P 500 lost 17.01 points to 2,079.06 and the Nasdaq fell 46.11 points to 4,848.44.
Investors are concerned about whether Britain will choose to remain in the European Union in a June 23 referendum. Recent polls predict the so-called “Brexit” vote will be a close one, which has led to unpredictability on what the departure may mean for 28-member economic and political union.
“Markets are getting a bit more jittery,” said Craig Fehr, a Canadian market strategist at Edward Jones in St. Louis. “The markets are reading this as a tremendous amount of uncertainty as opposed to some sort of global economic catastrophe.”
Fehr said equity markets will feel the pressure in the short term if British voters decide to leave the EU, but not because it will necessarily be a negative for the global economic landscape. If successful, investors may also read it as a signal that other nations will soon contemplate the same move.
“It would take some time before we actually see the true economic impact of an exit,” he added. “All the political and economic agreements between the U.K. and the EU would not immediately cease overnight.”
Another factor that is weighing on markets is the upcoming U.S. Federal Reserve policy meeting that ends Wednesday. The Fed had been expected to raise rates again as early as this month, but it now appears likely it will remain in a wait-and-see mode after the last two monthly jobs reports in the U.S. put a damper on expectations.
In corporate news, shares in professional social networking site LinkedIn (NYSE:LNKD) soared $61.13 or 46.64 per cent to US$192.21 after Microsoft announced it was purchasing the company for US$26.2 billion in cash. Shares of Microsoft (Nasdaq:MSFT) fell $1.34 or 2.6 per cent to US$50.14 at the close.
Meanwhile in commodities, the July contract for benchmark North American crude oil was down 19 cents at US$48.88 a barrel, while July natural gas rose three cents to US$2.59 per mmBtu.
Traders continued to see bullion as a safe bet in the current environment as August gold rose $11 to US$1,286.90 a troy ounce, while July copper added two cents to US$2.05 a pound.
The Canadian dollar was off 0.31 a U.S. cent at 78.08 cents US.
— With files from The Associated Press
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