While you were sleeping: UPDATED BoE's Carney signals stimulus as Boris drops out

Stocks continued to recover on both sides of the Atlantic from the Brexit roller-coaster.

In latest developments, the British pound weakened as Bank of England governor Mark Carney signalled an easing in monetary policy to offset the impact of the UK's decision to leave the European Union.

Boris Johnson's shock decision not to seek the prime ministerial post added to the political drama gripping Britain.

"The economic outlook has deteriorated and some monetary policy easing will likely be required over the summer," Mr Johnson said.

The pound slid 1.5% against the US dollar.

"The comments clearly signal that the Bank of England has decided to loosen monetary policy to support growth," Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ in London, told Bloomberg.

"And it will look through a temporary period of higher inflation resulting from a sharp decline in the pound. BOE easing will reinforce the weakening trend for the pound."

European markets up
Stocks, however, climbed. Europe's Stoxx 600 Index ended the session with a gain of 1% from the previous close. Germany's DAX index rose 0.7%, France's CAC 40 index increased 1%, while the UK's FTSE 100 index rallied 2.3%.

"Central banks will flood the market throughout the summer with easy money to make sure no real big accident happens," Benno Galliker, a trader at Luzerner Kantonalbank in Lucerne, Switzerland, told Bloomberg.

"The expectation of easy monetary policy across the world is one of the things that works well for the stock market and most European companies aren't affected that much by Brexit because they trade with China and the US mainly."

Wall Street recovers Brexit losses
Wall Street also took note. The Dow Jones Industrial Average surged 235.31 points, or 1.3% to 17,929.99 to pre-Brexit levels. The Nasdaq Composite Index gained 1.3% to 4842.67 and the Standard & Poor's 500 Index increased 1.4% to 2098.86.

US treasuries declined, pushing yields on the 10-year note five basis points higher to 1.52%.

Advances in shares of General Electric and those of Intel, up 2.8% and 2.3% respectively recently, spearheaded the gains in the Dow.

Shares of Visa dropped 3.3% for the only percentage decline after a federal court rejected an anti-trust settlement. That opened the door to years of fresh litigation. Shares of MasterCard also slid.

Shares of Hershey rallied after the Wall Street Journal reported that Mondelez International made a $US23 billion bid for the chocolate maker that would create the world's biggest candy company.

Shares of Hershey jumped, trading 15.2% higher at $US111.87 as of 12.27pm in New York. Shares of Mondelez also gained, trading 4.3% higher in New York.

Tigress Financial Partners analyst Philip Van Deusen told Reuters he expected the offer price to increase, given the rise in Hershey shares. "I think ($US107) is a good starting place," he said.

(BusinessDesk)