(Bloomberg) - Caution reigned in markets as mounting concern over Britain's vote on European Union membership fueled anxiety ahead of two key central-bank meetings this week, with Asian index futures signaling more losses and haven assets in demand.
Futures on equity gauges from Japan to Hong Kong foreshadowed declines after the S&P 500 Index posted its worst three days since February. The pound resumed losses as new polls indicated support for the U.K. leaving the EU was pushing ahead of that for remaining in the bloc, while the yen traded near an almost 3 1/2-year high against the euro. Gold also maintained gains as 10-year Australian government debt yields sank to a record low. U.S. oil dropped a fourth day amid concern over a climbing active rig count.
Financial markets have struggled over the past week as investors reassess lackluster global economic signals and concerns mount over the potential fallout from a June 23 referendum that will determine Britain's future within the EU. Risk assets have lurched on the outcome of "Brexit" opinion polls over the past two sessions, as traders place increasing importance on the vote. Monetary policy reviews from the Federal Reserve and Bank of Japan this week will also be scrutinized for clues as to the timing of U.S. interest-rate increases and potential expansion of Japan's record stimulus efforts.
"To survive and thrive as a trader we simply have to adjust to volatility," Chris Weston, chief market strategist at IG Ltd. in Melbourne, said in an e-mail to clients. "The key consideration here is what happens if we do actually see a 'leave' vote and a sudden shock to markets. What have central banks got in the kitty this time around? The answer, of course, is significantly less than in prior cycles." Stocks New Zealand's S&P/NZX 50 Index, the first major stock gauge to start trading each day, slipped 0.5 percent as of 8:52 a.m. Tokyo time.
Futures on the S&P 500 dropped 0.1 percent to 2,067 after the U.S. benchmark slumped 0.8 percent, bringing its three-day retreat to 1.9 percent. Mining and technology shares led losses in the U.S. on Monday, even after Microsoft Corp.'s deal to buy LinkedIn Corp. for $26.2 billion sent the social-networking company's shares up 47 percent. U.S.-listed stock of Baidu Inc., China's biggest Internet search engine, slid more than 5 percent in after-market trading as the company cut its sales forecast.
In Japan, futures on the Nikkei 225 Stock Average were bid down 0.3 percent to 15,930 on the Osaka pre-market, while yen- denominated contracts on the gauge listed in Chicago rose 0.2 percent to 15,950, following the previous session's 2.3 percent drop. Nikkei 225 futures were down 0.2 percent to 15,945 in Singapore.
Futures on the Kospi index in Seoul fell 0.2 percent in most recent trading, while those on the Hang Seng and the Hang Seng China Enterprises gauges were down at least 0.4 percent. Australian markets resumed after a holiday.
Data on business confidence and credit-card purchases in Australia is due Tuesday, along with Japanese industrial production and Indian wholesale prices. The Fed starts meeting in Washington ahead of their statement due Wednesday U.S. time, while the BOJ will review policy on Thursday.
Sterling weakened 0.5 per cent to US$1.4205 and lost the same amount in a third day of declines against the euro. Four opinion polls from three separate companies have put the campaign for Britain to leave the EU in front of the 'Remain' camp. The prospect of 'Brexit' actually coming to fruition rocked currency markets Monday, with a measure of two-week implied volatility on the pound jumping to a record high.
"Everything is about Brexit right now," said Richard Falkenhall, a trading strategist at SEB AB in Stockholm. "Speculative accounts have added onto long dollars and long yen positions. At the same time people are adding to shorts in the pound and in the euro. When you watch the polls they're tighter than they've ever been. So there is a lot of uncertainty out there at this point." The yen, which typically moves at odds with Japanese shares, extended gains into a third day, rising 0.2 per cent to 106.06 per US dollar, after touching its strongest level since May 3 last session. Japan's currency added 0.2 percent in a sixth strengthening day versus the euro.
The dollar reasserted itself against some higher-yielding currencies, with New Zealand's dollar falling 0.3 per cent. The Bloomberg Dollar Spot Index, a gauge of the greenback versus 10 major peers, was little changed for a second session.