Markets seem to have got the pre-referendum volatility out of their system. The FTSE 100 and other European indices were basically unchanged on Wednesday ahead of the next set of Brexit opinion polls. The British pound was edging out some small gains against the euro and US dollar amid a lack of economic data.

Vested interests continue to put forward opinions on whether the UK should remain in or leave the EU in the hope of swaying undecided voters. Signatures from more than 1,280 executives makes clear the opinion of big business that the UK should remain in the EU. However the position of big business has been known for a long time, and has actually played well as an anti-establishment vote for the Leave campaign. The support of big business might sway some undecided employees but the under-reaction in markets shows it is not a game-changer at this late stage.

The sharp readjustment out of safe havens in favour of risky assets including the British pound in the last few days means markets may be underestimating the fallout from a Brexit.  Even if betting and financial markets are proven correct and the UK votes against Brexit, the potential for political fallout in the aftermath is a downside risk.

Retail shares were under pressure on Wednesday with shares of Debenhams and Swedish fashion chain H&M both lower. Debenhams reported a drop in second quarter sales whilst H&M announced a fall in Q2 pre-tax profits. The firms blamed the cold spring weather for the disappointment, a factor that didn’t appear to deter shoppers at rival Zara, owned by Inditex.

US stocks look set to open mixed with the Nasdaq getting heavily weighed down by Tesla shares which may open lower by double digits after the electric car maker announced a poorly-received offer to buy Solar City. The deal would dilute existing shareholders, worsen cash flows and add to Tesla’s debt burden; all threats to the company’s long term survival as it attempts rapid expansion into the mass car market.

USA pre-opening levels

S&P 500: 1 point higher at 2,089

Dow Jones: 10 points higher at 17,839

Nasdaq 100: 3 points lower at 4,410


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