Accessibility links

Breaking News

Global Markets Renew Downturn On Signs Of U.K. Bank Runs

Global markets plunged again on fears of economic instability in the wake of Britain's vote to exit the European Union, with some U.K. banks reporting runs on their investment funds.

In wild trading on July 5 and July 6, stocks plummeted while the British pound nosedived to new 31-year lows, and investors fleeing unfavored markets drove the yields on safe-haven U.S. Treasury bonds to record lows.

Japan's Nikkei index dropped 3 percent at the open of trading on July 6 after major U.S. and European stock indexes declined by 0.7 percent to 1.5 percent the previous day.

Sterling shed a full U.S. cent in a matter of minutes to hit a new low of $1.28 in Asian trading.

Signs of a possible run on London's vital banking sector spooked investors on Wall Street after three prominent U.K. financial firms reported that they stopped trading in their commercial property funds because large numbers of investors were trying to liquidate their holdings.

The Bank of England warned that the economic risks of "Brexit" had begun to "crystallize" and announced an easing of bank rules to promote lending to consumers and businesses.

Adding to the markets' worries, China -- recently the world's strongest engine of growth -- hinted that it may not be able to hit its growth target of 6.7 percent in the second quarter.

The yields on Treasury bonds dropped to 1.357 percent, the lowest on record, as investors piled into the safe investments. German, British, Swiss, and Japanese long-term bond yields were also at or near record lows.

"There's no strong growth. The only thing we have is uncertainty," Hiroko Iwaki, senior bond strategist at Mizuho Securities, told Reuters.

With reporting by Reuters, AP, and AFP
  • 16x9 Image


    RFE/RL journalists report the news in 27 languages in 23 countries where a free press is banned by the government or not fully established. We provide what many people cannot get locally: uncensored news, responsible discussion, and open debate.