What's going on?

Despite appearing to favor voting for a Brexit last week, new polls suggest that British voters are more likely to vote to stay in the European Union (EU), when they vote on Thursday. Stocks in Europe and the UK were up more than 3% (and US stocks rose too).

What does this mean?

While various polls suggest the race is still neck-and-neck, investors might be getting optimistic that the recent shift towards the �Remain� camp is an indication that previously undecided voters are choosing to remain in the EU. Sentiment could change between now and Thursday, but Monday�s market moves clearly show that global investors view a Brexit as a �risk-off� event (see below). If the Brits vote to remain in the EU on Thursday, investors will view the result as removing a potentially significant risk to markets – and they could rally further.

Why should I care?

The bigger picture: Concerns over a potential Brexit have shown us what a �risk-off� atmosphere looks like. A number of things tend to happen all at once whenever there is something that spooks investors globally. For one, stocks and commodities (e.g. oil) tend to go down because a �spooky� event could lead to less economic activity and, therefore, to lower profits and less demand for commodities. �Safe� government bonds, like those of the US and Germany, tend to go up as investors seek security. Lastly, the Japanese Yen tends to rally (here�s one explanation why) and, often, gold goes up in price (read why here).

For markets: Banks were amongst the biggest winners on Monday. Banks, particularly in Europe and the UK, have had a rough year. Brexit is seen as a potential big negative for banks because it would likely exacerbate conditions that are already difficult for them (for example, by hampering economic growth, which banks need in order for businesses to want to borrow money from them). The removal of the Brexit threat would be a significant near-term positive for banks.