European officials are planning a series of emergency meetings in case Britain votes to leave the European Union, aimed at calming financial markets and avoiding a domino effect in weaker economies, according to people familiar with the preparations.
EU officials are particularly concerned about contagion spreading to two eurozone countries: Ireland, whose economy is closely linked with Britain’s, and Portugal. In the latter, a troubled banking system is dependent on cheap loans from the European Central Bank and could be cut off if the last of the four major credit-rating firms downgraded Portugal’s sovereign rating to junk status.
In Brussels, leaders of EU institutions will gather Friday morning to discuss the outcome of the referendum and issue a joint statement, a spokesman for the European Commission, the EU executive, said.
The Brexit vote could cause a huge buying opportunity: Wells Fargo
Britain's upcoming referendum on whether to quit the European Union has created considerable market volatility. According to one Wall Street firm, however, investors who panic and sell if the Brexit wins will do so at their own peril.
"If there is an exit vote, you know we want our clients in here stepping in to buy U.S. large-cap stocks," Scott Wren, Wells Fargo Investment Institute's senior global equity strategist, said recently on CNBC's "Futures Now." "After we get finished with the noise and the volatility, after a few weeks of that, you know people will have wished they bought stocks."
Wren, who is one of Wall Street's biggest bulls, expects the S&P 500 Index to end the year between 2,190 and 2,290. That represents as much as a 9 percent gain from current levels.
Brexit could lead to political instability in EU: ECB's Makuch
Britain's departure from the European Union could lead to political instability within the bloc and slow down further integration, European Central Bank Governing Council member Jozef Makuch said.
The referendum on Thursday could also lead to financial market instability but the ECB will act to reduce market volatility as it has "done many times in the past," Makuch, who is also Slovakia's central bank chief, told reporters.
IMF calls for overhaul of Abenomics stimulus policies
The International Monetary Fund on Monday urged Japan's government to overhaul its stimulus policies by moving income policies and labor market reform to the forefront, supported by more monetary and fiscal stimulus.
"Under current policies, the high nominal growth goal, the inflation target, and the primary budget surplus objective all remain out of reach within the timeframe set by the authorities," the IMF said in a statement after "Article 4" annual consultations on economic policy with Japan.
The global lender called for a more flexible monetary policy framework with the Bank of Japan abandoning a specific calendar date for achieving its 2 percent inflation target. It added that Japan would need to raise the sales tax to at least 15 percent to strike the right balance between growth and fiscal sustainability.
"Without bolder structural reforms and credible fiscal consolidation, domestic demand could remain sluggish, and any further monetary easing could lead to overreliance on depreciation of the yen," the IMF said.
Oil extends gains as Brexit fears ease
Oil extended gains in Asian trading on Monday as a weaker dollar and easing worries over Britain's possible exit from the European Union helped support crude prices.
London Brent crude for August delivery was up 48 cents at $49.65 a barrel by 0455 GMT, after settling up $1.98, or 4.2 percent, at $49.17 on Friday.
NYMEX crude for July delivery, which expires on Tuesday, was up 55 cents at $48.53 a barrel, after closing up $1.77, or 3.8 percent, on Friday.
"With Brexit dominating the market headlines, it might be moves in the U.S. dollar that drive the oil market at least until we get that out of the way," said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
Reference: Reuters,CNBC,Wall Street Journal
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