Three reasons for the turnaround in sentiment

Author: Adam Button | Category: News

A mix of stupidity, cold-heartedness and fear

Part 1

The all-time classic market rumours cartoon is perfect to illustrate what's happening today.

The headlines say something like:

UK PM David Cameron suspends EU vote campaigning because of Jo Cox death.

What it means is that he won't deliver speeches today. (update: or Friday, maybe longer)

However, somewhere in the translation that gets passed on as something like: The UK is suspending, or delaying the referendum vote indefinitely.

There are no reputable sources saying the referendum will be called off or delayed, but that's the rumour.

Part 2

This is cold-hearted as it gets, but if you want to know how markets work, this is it:

The murder of a pro-EU Minister of Parliament is good for the 'remain' side. The attacker reportedly yelled 'Britain first' before murdering Jo Cox.

The backbone of the 'remain' campaign is fear and a lunatic killing a politician doing her job is exactly the kind of thing that stirs the fears of an undecided voter and pushes him or her to the familiarity of the EU.

Part 3

In an unhinged market rumors fly and the truth doesn't always matter. That account that the attacker yelled "Britain first" is in dispute (the source is questionable) but perception is reality.

In a market like this, truth and facts are secondary to rumours and sentiment, at least in the short term. Trade accordingly.

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