Brexit and Fed fears weigh on world stocks; yen firms (plus Tensile Investing)

As this week's Fed meeting and next week's Brexit referendum draw nearer, the market is once again getting a case of the nerves creating sentiment toward caution that brought the Dow down 132 points today.  With the potential damage to the EU threatening global recession, oil is also down and EU stocks hit their lowest levels in three months.  Still, with only 3.6 billion shares traded, more money is sitting on the sidelines than on the table.  Much more reporting due this week, and then we'll see.

Tonight's MRI finance seminar in Troy was on the topic of "Tensile Investing," reportedly the hottest new strategy.  A 6-hour video explaining the whole thing can be had for $150.  The group may chip in and buy one.  What is tensile investing?  In tonight's one-hour intro, they explained the basic steps in the strategy but I still had no idea why it was called "tensile."  So I looked the word up when I got home tonight.  Tensile - the amount something can be stretched without breaking.  Now it all makes a lot more sense.  The instructor felt this was a very powerful new tool that would be well worth spending a year studying.  That may well be the case, but I'm still trying to master the junk bond strategy we were introduced to six years ago, a strategy that, much to my surprise, he still maintains is very effective and says he still uses regularly.  So the next step is to jump back on that one and finally and at last master it.

Markets | Mon Jun 13, 2016 5:04pm EDT

Brexit and Fed fears weigh on world stocks; yen firms

NEW YORK | BY CAROLINE VALETKEVITCH

DJ:  17,732.48  -132.86      NAS:  4,848.44  -46.11          S&P: 2,079.06  -17.01

REUTERS/BRENDAN MCDERMID

World stock markets fell while the safe-haven yen firmed on Monday amid concerns that Britain may be on the verge of voting to leave the European Union in a referendum that is two weeks away.  Uncertainty over the outcome of this week's policy meeting of the U.S. Federal Reserve added to the cautious tone.

Though traders predict the U.S. central bank will not raise interest rates this week, investors will be looking for clues about when the Fed might make make a rate move.

A vote by Britain to leave the 28-member EU, dubbed "Brexit," could tip Europe back into recession, putting more pressure on the global economy. Britain's "Out" campaign widened its lead over the "In" camp ahead of the country's June 23 referendum, according to two opinion polls published by ICM on Monday.

"Brexit would present the first formal challenge to the current global economic order and could spark a much wider and more dangerous fracture of the European Union," said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York.

The euro dropped to its lowest level against the yen since February 2013. It was last at 119.88 yen, down 0.4 percent EURJPY=. Sterling, which was down broadly, fell to a three-year low against the yen, at 149.50 yen GBPJPY=. The pound last traded down 0.9 percent at 151.04 yen.

U.S. stocks ended lower for a third straight session as investors braced for the Fed meeting and Britain's referendum.

"I think the market is nervous about higher interest rates and frankly about maybe the U.S. economy not being able to get over that last hump to a full recovery," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa.

Shares of Microsoft (MSFT.O) fell 2.6 percent after the company announced it would buy online networking company LinkedIn (LNKD.N) for $26.2 billion in its biggest-ever deal.

The Dow Jones industrial average .DJI was down 132.86 points, or 0.74 percent, to 17,732.48, the S&P 500 .SPX lost 17.01 points, or 0.81 percent, to 2,079.06, and the Nasdaq Composite .IXIC dropped 46.11 points, or 0.94 percent, to 4,848.44.

European shares fell to their lowest level in more than three months, hit by the unease over Britain's possible exit from the EU. The FTSEurofirst 300 .FTEU3 closed down 1.9 percent.

U.S. Treasury yields fell to a four-month low as investor risk appetite ebbed. Sovereign debt yields in developed markets around the globe fell to all-time lows.

U.S. benchmark 10-year notes US10YT=RR rose 7/32 in price to yield 1.616 percent, after earlier falling to 1.608 percent, the lowest level since Feb. 11. Ten-year yields in Germany DE10YT=TWEB remained near zero, close to record lows.

Oil prices ended down, pressured in part by global economic concerns. Brent crude oil futures LCOc1 fell 19 cents, or 0.4 percent, to settle at $50.35 per barrel, while U.S. crude futures CLc1 also declined, falling 19 cents to settle at $48.88.

Note:  Volume not reported but, per BATS, 6.3 billion shares traded.