The threat of Scotland splitting from Britain knocked the pound to a 10-month low against the dollar yesterday and sparked caution across equity markets already uncertain about whether a ceasefire in Ukraine would hold.
An opinion poll showed for the first time this year that Scots may vote for independence next week in a referendum that could herald the break-up of the United Kingdom.
The pound slumped and Britain’s top shares dropped further from a recent 14-and-a-half-year high as companies with strong business ties to Scotland fell across the board.
The pound is one of several hotly debated issues. An independence leader said Scotland would share the currency, but Westminster has ruled this out, leading to uncertainty about valuations, debt and the sharing of North Sea oil revenues.
With little news to guide trading, stocks on Wall Street mostly fell. But analysts said the market trend is higher with the outlook for the Federal Reserve to begin to raise interest rates only well into 2015.
“The path of least resistance continues to be higher. That will most likely continue for the foreseeable future, especially as everybody understands the move from the Fed will be very gradual,” said Ran Larson, head of US equity trading at RBC Global Asset Management in Chicago.
MSCI’s all-country world index fell 0.35 per cent to 430.84, while the FTSEurofirst 300 index of top European shares closed down 0.4 per cent at 1,390.42.
On Wall Street, the Dow Jones industrial average was down 16.72 points, or 0.10 per cent, at 17,120.64.
The Standard & Poor’s 500 Index was down 5.22 points, or 0.26 per cent, at 2,002.49.
The Nasdaq Composite Index was up 4.22 points, or 0.09 per cent, at 4,587.12.
Sterling sank more than one per cent, the most in 13 months, to trade at $1.6145 against the dollar.
The dollar was slightly lower against the euro and gained against a basket of six major currencies, up 0.35 per cent on the day.
US Treasuries yields fell on doubts over the strength of a ceasefire between Ukrainian forces and pro-Russian separatists, and renewed concerns over US economic growth following last week’s disappointing jobs report.
Brent crude slid below $100 a barrel for the first time in more than a year as Chinese and US data pointed to slower-than-expected growth in the world’s top oil consumers.
Brent fell to a low of $99.36 a barrel, its lowest since May 2013. It last traded down 81 cents to $100.01. US crude tumbled $1.09 to $92.20 a barrel.