Tuesday Briefing: Sterling Gets Pounded by Brexit Fears

June 21, 2016

The market is inching closer to a potential economic shock. The EU referendum where the citizens of Britain will decide the fate of the U.K.’s membership in the EU is two days away, and the pound is already showing signs of collapsing under pressure. A Brexit could do a lot more damage to the pound as it would drag the currency to a 30-year low, according to analysts. Many automakers, including Toyota, have sided with Bremain with a very simple reason. They believe a Brexit would hurt the car exports in the U.K., and urge the country to remain. Though Brexit has stolen the spotlight, there are other important economic stories on Sentifi, so read on to find out.

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1/ GBP: Falls yet again ahead of Brexit vote [2,103 messages in the last 24h]

The EU referendum is just two days away, and the pound has fallen under pressure after experiencing a two-day rally. The future of the pound is very shaky. Even billionaire investor George Soros is not so optimistic about the prospects of the currency in the event of a Brexit, as he said the pound could lose a fifth of its value. As of now, the polls show a somewhat split even opinions on the outcome of the EU referendum, with a YouGov poll of 1,652 voters showing 44% for Leave and 42% for Remain, while a Daily Telegraph survey of 800 people had 46% for Leave and 53% for Remain.

2/ Toyota Motor Corp: Warns against Brexit [746 messages in the last 24h]

A Toyota stands for sale on the forecourt of a Toyota dealer in Purley, south London, October 10, 2012. REUTERS/Andrew Winning
Toyota refers the U.K. to stay in the EU. (REUTERS/Andrew Winning)

Toyota, along with BMW and GM, voiced its opinion that a Brexit will inflict lots of damage to the U.K.’s car industry, which heavily depends on exports. Leaving the EU means losing a valuable channel for exports. In fact, Toyota pointed out the benefits of staying in the EU are numerous, from easy access to parts from other member states to growing demand. With 80% of cars made in the U.K. being exported, the Brexiteers made a very good case for a Remain.

3/ Elliott Management Corp: Acquire Dell’s software division [553 messages in the last 24h]

Along with Francisco Partners, Elliott Management has agreed to acquire the software division of Dell which has a price tag of more than $2 billion. The deal, including Quest Software and SonicWALL, is said to be Dell’s move to help pay its $67 billion EMC acquisition.

4/ TalkTalk: Bonuses are halved to cope with cyber attack [486 messages in the last 24h]

The company suffered a data breach last year that cost it £60 million. To cope with that damage, it has decided to cut the bonuses of its board by half. Without the damage, the company is already struggling in a tough market environment where it lost 181,000 phone and broadband customers in the year to March 31.

5/ George Osborne: Warns Brexit could cause job loss [396 messages in the last 24h]

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George Osborne has been persistent about why Brexit is bad. Will people listen to him?

The Chancellor once again warned the people of Britain the ramifications of a Brexit, and this time it has to do with jobs. He said people could start losing jobs as soon as Friday if the result was the U.K. leaving the EU. He further said it’s his responsibility to do his best to protect people from an economic shock, but a shock with a huge magnitude stemmed from a Brexit, he would not be able protect people.

6/ Cigna Corp: Concern about the merger is growing [352 messages in the last 24h]

Investors are sharing a growing concern about the $48.2 billion merger between Cigna and Anthem, the same concern that has plagued many mega mergers that came before. The deal now could potentially be blocked by the regulators after a California’s insurance commissioner urged the U.S. Justice Department to reject the deal. And there’s a good reason for the concern. In the U.S., Anthem is the second biggest health insurer, and Cigna is the fourth biggest. A merger between the two could be a violation of the antitrust law.

7/ Reserve Bank of India: The hunt for Raghuram Rajan’s successor has officially begun [349 messages in the last 24h]

After Governor Raghuram Rajan announced his exit in September, many candidates for the job have surfaced. The frontrunners include RBI Deputy Governor Urjit Patel and former Deputy Governor Rakesh Mohan. Prime Minister Narendra Modi and Finance Minister Arun Jaitley will reportedly decide on the successor no later than July.

8/ Central Bank of Nigeria: Clears backlog of foreign exchange demand [281 messages in the last 24h]

With its announcement of the new monetary policy last week, the Central Bank of Nigeria has now cleared all backlog of foreign exchange demand in the country. It also looks into abandoning the dollar peg by June 20 to allow its currency naira to trade freely.

9/ Stock Market Crash: Concern persists in the market [262 messages in the last 24h]

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Will the stock market crash? Friday will be as soon as we know the answer to this.

With the financial market experiencing lots of volatility in stocks and currencies, the concern for a future stock market crash is growing. The EU referendum is only two days away, which could pose a huge threat to the market as there is no shortages of warnings for an economic shock stemmed from a Brexit. If anything, the first real signs of a market crash could be evident following the results of the EU referendum.

10/ Bombardier: Seeks government aid [236 messages in the last 24h]

The company has submitted a request to the government requesting for aid to turn things around. This is one of many measures taken by the company to shore up its position, including suspending dividend payouts and $2.5 billion cash injections from asset sales to Quebec’s government and the provincial pension fund manager. Its request is being review by the lead federal minister.

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