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London - Global equities traded near a one-week high and the pound approached its strongest level in five months a day before Britons vote on membership in the European Union. Oil and copper led gains in commodities.
The MSCI All-Country World Index was little changed following three days of gains as bookmakers’ odds implied there’s only about a one-in-four chance that Britons will opt to leave the EU in Thursday’s referendum. Sterling rose against most of its 16 peers and shares in emerging markets advanced for a fourth day.
Crude oil was set to close above $50 a barrel for the first time in almost two weeks.
Global stocks have climbed in the past three days as odds of a so-called Brexit fell at betting shops after the murder of a UK lawmaker who favoured staying in the EU on Thursday.
The implied chance of a leave vote dropped to about 25% from 43% a week ago. Still, opinion polls suggesting the vote is too close to call are keeping a rein on investor sentiment following warnings from central bankers, including Federal Reserve Chair Janet Yellen, that a victory for the "Leave" camp would destabilize financial markets around the world.
"'Remain' is not completely priced in as the costs of a 'Leave' could be quite large," said Daniel Murray, head of research at EFG Asset Management in London.
"It’s clear that betting odds are skewed towards remain at the moment, which is the main data the market will be moving on until there is a clear outcome."
For a wrap-up of Brexit referendum coverage, including the latest polls, click here.
Stocks
The MSCI AC World Index added less than 0.1% as of 10:55 a.m. in London. The Stoxx Europe 600 Index swung between gains and losses more than five times after capping their biggest three-day advance in almost 10 months yesterday. The FTSE 100 Index of UK stocks rose for a fourth day in the longest run of gains in two weeks.
Merlin Properties Socimi SA gained 4.4% after agreeing to a merger with Metrovacesa SA to create the largest Spanish property rental group.
Futures on the S&P 500 rose 0.1%, after the US index closed higher in a zigzag session on Tuesday. Adobe Systems fell 5.2% in pre-market New York trading after forecasting revenue in the current quarter that may miss analysts’ estimates amid slowing momentum for its cloud-based products.
The MSCI Emerging Market Index rose 0.4%, following a 3.2% jump over the last three days. Chinese stocks led the advance on Wednesday, with the Shanghai Composite Index climbing 0.9% to a two-week high.
Currencies
Sterling appreciated 0.05% to $1.4659, after reaching a five-month high of $1.4783 on Tuesday. It’s jumped 3.2% over the past five sessions.
Since British lawmaker Jo Cox’s murder last week "a fair bit of repricing has occurred in the pound on the back of the shift in polls that were earlier clearly favouring Leave," said Rodrigo Catril, a currency strategist at National Australia Bank in Sydney. "The pound will definitely be volatile ahead of the vote."
The Bloomberg Dollar Spot Index fell 0.2%, after snapping a four-day losing streak on Tuesday. The yen climbed 0.3% to 104.40 versus the greenback, extending this month’s advance to about 6%. The Australian and New Zealand dollars appreciated 0.5%.
Commodities
Crude oil rose 0.9% to $50.31 a barrel in New York as US industry data showed crude stockpiles declined, trimming a glut. Inventories fell by 5.2 million barrels last week; the American Petroleum Institute was said to report.
Government data on Wednesday is forecast to show supplies slid by 1.5 million barrels, slipping for a fifth week while still more than 100 million barrels above the five-year average.
"The oil price will probably continue to labour around this $45 to $50 a barrel area for some time," David Lennox, an analyst at Fat Prophets in Sydney, said by phone. "Demand is still under question. Inventories are declining, but they’re still large and will cap any significant rally."
Gold slipped 0.1%, after sliding 2.4% over the last two days.
Corn was little changed in Chicago following a 5.7% slide in the last session that marked the contract’s steepest drop since it began trading in December 2013. Prices dropped on Tuesday amid an improving supply outlook for the US and Brazil, the world’s top exporters.
Bonds
The yield on US Treasuries due in a decade retreated from a two-week high, falling two basis points to 1.69%. The Fed’s Yellen reiterated on Tuesday that a vote to leave the EU could have "significant economic repercussions," even as she warned against exaggerating its global impact.
She had said on June 15 that Brexit risks played a part in the Federal Open Market Committee’s decision to hold off from raising interest rates. Yellen is scheduled to give a second day of testimony before lawmakers Wednesday.
Futures indicate 49% odds that the Fed will tighten policy this year, down from 76% probability at the start of the month.
The yield on Germany’s 10-year bond was little changed at 0.05% on Wednesday. The nation also sold 30-year bonds to yield 0.65%, the lowest on record.
