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Risk appetite improves as banks rally 

July 11, 2016

Dave Shellock, The Financial Times

Global markets adopted a more pro-risk tone as European financial stocks rebounded after the previous day’s sell-off while “core” government bond prices and gold gave back some of their recent gains.

Wall Street inched lower as oil prices went into retreat following the release of bearish data on US crude inventories.

But the underlying driver of sentiment remained concerns about the impact of Brexit, keeping the yen well-supported and sterling within sight of Wednesday’s three-decade low against the dollar.

A key focus for the market’s concerns has been the large number of UK commercial real estate funds that have suspended redemptions due to a sharp increase in withdrawal demand triggered by the Brexit vote.

“Property is an illiquid asset and this week shows what can happen to illiquid assets when the fundamentals/facts change,” said Jim Reid, macro strategist at Deutsche Bank.

“Given the illiquidity of many other financial markets these days due to post crisis regulations this is perhaps a glimpse of what the future might hold in the next recession for other assets.” Read more


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