Good morning! Here’s what you need to know in markets on Wednesday.
US stocks rallied overnight on Tuesday for the first time since Britain’s decision to leave the European Union sent global markets into free fall. The Dow closed 1.57% higher, the S&P 500 jumped 1.78%, and the Nasdaq climbed 2.12%.
Asian share markets joined a global rally on Wednesday as the immediate impact of Britain’s vote to leave began to wane and investors wagered central banks would have to ride to the rescue with more stimulus measures. Japan’s Nikkei is up 1.92% at the time of writing (6.20 a.m. BST/1.20 a.m. ET), while China’s benchmark Shanghai Composite is up 0.46% and the Hong Kong Hang Seng is up 0.64%.
Vodafone has signalled that it might consider moving its headquarters out of the UK given uncertainty about how many of the “positive attributes” of being in the EU will remain once Britain has left the bloc. The Financial Times reports that the telecoms group, which was founded in the 1980s in the UK but now generates the majority of its revenues overseas, said it was not possible “to draw any firm conclusions regarding the long-term location for the headquarters of the group” after Britain’s decision to leave the EU.
The pound is more or less flat against the dollar after volatile trading overnight. Sterling is down 0.06% to 1.3338 against the dollar at the time of writing (6.25 a.m. BST/1.25 a.m. ET).
The race for financial firms to move staff from London post-Brexit vote has started. “US global banks are likely to start strategically implementing parts of their contingency plans rather than wait for trade and service arrangements to be agreed,” ratings agency Fitch said in a note on Tuesday.
The co-chief executive of Goldman Sachs International has warned that some of the bank’s 6,500 staff in the UK may be moved to Europe following the referendum result. The Times reports that Richard Gnodde, who is also co-head of the Investment Banking Division of Goldman Sachs, said at the paper’s CEO Summit that “every outcome is possible” when asked if the bank’s contingency plans following the Brexit vote involved moving some staff outside of the UK.
European Central Bank President Mario Draghi told EU leaders on Tuesday that Britain’s decision to leave the EU could reduce euro zone growth by a cumulative 0.3% to 0.5% compared to previous estimates over the next three years, an EU official said. Reuters reports that earlier this month, before Britain’s June 23 EU referendum, the ECB estimated that the euro zone would grow in annual terms by 1.6% in 2016 and by 1.7% in 2017 and 2018.
Toyota said late on Tuesday it is recalling 482,000 US hybrid Prius and Lexus CT200h cars because of a possible airbag inflator defect. The recall covers 2010-2012 vehicles with airbag inflators that could have a small crack in a weld, which could lead to the separation of the inflator chambers. The air bag could partially inflate and the inflator could enter the vehicle interior, increasing the risk of injury, Toyota said.
The businessman who introduced BHS-buyer Dominic Chappell to Sir Philip Green said he “never thought in a million years” that he would end up running BHS. The BBC reports that Paul Sutton said that Chappell, who bought BHS from Sir Philip’s retail empire, had initially been his driver. Sutton had been interested in buying BHS but abandoned the plan after a dossier was passed to Sir Philip.
Japan’s Sony said on Wednesday it expects its image sensor business will miss its revenue target for the 2017 fiscal year because of weakening global demand for smartphones. Sony forecast a revenue range of 1 trillion-1.05 trillion yen ($9.76 billion-$10.25 billion/£7.3 billion-£7.7 billion) for the year starting April 2017 in its revised medium-term business plan for the devices unit, which includes image sensors. That was lower than the previous target of 1.3 trillion-1.5 trillion yen.