Wall Street rebounds at open as post-Brexit bargain hunt begins

WASHINGTON (REUTERS) - Wall Street opened sharply higher on Tuesday (June 28) as investors rushed to pick up stocks after Britain's decision to leave the European Union sparked a massive two-day selloff in global markets.

Banks, which were the worst hit since the referendum on Thursday, were among the most attractive stocks for bargain hunters. The S&P financial index rose 1.32 per cent.

Morgan Stanley, Bank of America, Citigroup and JPMorgan were all up more than 2.5 per cent while Goldman Sachs rose 1 per cent.

Global equities commenced a free fall on Friday, losing more than US$2 trillion (S$2.7 trillion) in market capitalization, as investors scrambled to safe havens such as gold and the Japanese yen.

A rebound in oil prices on Tuesday signaled an appetite for riskier assets, while gold lost its two-day shine and fell 1.1 per cent.

The yield on 10-year US Treasury bonds turned positive on Tuesday after two days.

However, uncertainty over when and on what terms Britain will end its membership is expected to fuel volatility in the next few weeks. "I think this is a short-lived rally," said Paul Nolte, portfolio manager as Kingsview Asset Management. "There is an awful lot of questions over Brexit that haven't been answered and markets are going to be reacting to that."

At 9.46 am ET (9.46 pm Singapore time) the Dow Jones Industrial Average was up 186.41 points, or 1.09 percent, at 17,326.65. The S&P 500 was up 22.23 points, or 1.11 per cent, at 2,022.77. The Nasdaq Composite was up 66.35 points, or 1.44 per cent, at 4,660.80.

Nine of the 10 major S&P sectors were higher, led by a 1.75 per cent gain in the energy index. Exxon and Chevron rose more than 1 per cent each.

While investors do not expect the US Federal Reserve to raise short-term interest rates anytime this year, they will keep an eye on economic data that can steer the Fed's sentiment. Gross domestic product increased at a 1.1 per cent annual rate, rather than the 0.8 per cent pace reported last month, the Commerce Department said on Tuesday.