Stock markets slumped on Thursday, erasing the brief spate of relief from Wednesday with the FTSE 100 falling to a fresh 15-week low. Rate decisions from the Federal Reserve and the Bank of Japan, both of whom kept policy steady, have unnerved markets.

Brexit concern has been brought back to the fore. The Federal Reserve cited the referendum as a one of the factors in its decision not to raise US interest rates in June, and an opinion poll from Ipsos Mori has shown a 53:47 lead for a vote to leave the EU.

The Brexit debate has encircled the Bank of England before the release of its decision on UK interest rates today. BOE governor Mark Carney has written a letter defending the Bank of England’s right to talk about Brexit during the political purdah period before the election. Mr Carney is either vigorously defending the independence of the Bank of England or acting as stooge for the government. The one you believe likely depends on your voting intensions.

As the Bank of England prepares to keep rates on hold, in part due to the economic risks of the referendum, another strong data point has shown the UK economy is ticking along nicely. UK retail sales for May grew 0.9% m/m, much faster than the 0.2% rise expected.

Banks are top fallers across Europe, extending a run of weakness that’s been in place all this week as the referendum draws closer. Another favourite sector for short sellers before the referendum, the homebuilders, are amongst the handful of risers on the FTSE 100.

US stocks look set for a lower open, extending the downturn that happened in the last hours of trading yesterday following the Fed decision.

The Fed’s belief that “gradual increases in the federal funds rate” are appropriate has been overshadowed by talk of a “loss of momentum” in the US labour market and a reiteration of the need to “proceed cautiously”. The changes in the dot plot combined with Ms Yellen’s emphasis on caution takes July off the table for a rate hike, and more-than-likely September too.

USA pre-opening levels

S&P 500: 6 points lower at 2,065

Dow Jones: 55 points lower at 17,585

Nasdaq 100: 16 points lower at 4,393


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