Brexit realisation grab markets

Project Fear. Scaremongering. That was what the pro-Brexit advocates were calling any warnings made by those that wanted the UK to remain as part of the single market. 1,700 pips later, as the British Pound reached levels not seen for over 30 years, those warnings are on their way to becoming promises.

Friday the 24th was a historic day that will be remembered for a long time. Some figures set new records, while others came very close. Of course, none of these were positive figures. For example, data from S&P Global showed the investors have lost $2.1 trillion because of Brexit, the worst one day drop ever, with the previous being $1.9 trillion in September 2008.

Below are some of the more noteworthy figures that have been achieved during the most recent Black Friday:

  • Highest single day movement in the British Pound. The Pound dropped from 1.50 to 1.33 within a matter of hours, a level not seen since 1985. It rebounded and slowly climbed back over the day to close around 1.37.
  • The FTSE was down 8.3% within minutes of opening meaning £137bn has been wiped off UK blue chip stocks. RBS and Barclays had been some of the hardest hit losing around 30% of their value. The FTSE closed 3.15% down after an intra-day retracement.
  • The London Stock Exchange recorded the all time high in trading volume, reaching £14.2bn in 2,662,594 trades. This equated to the second highest turnover in its history only behind Lehman Brothers crash.
  • Dow Jones opened 500 points down, over the day reaching over 610 points down, the 8th largest drop by point total.
  • Bloomberg’s Billionaire Index noted that the world’s 400 wealthiest investors lost $127 billion on the day.
  • The 10-year German government bond surged with yields tumbling back into negative territory and a new record low of -0.17%.
  • Nikkei opened over 7% or 1,100 points down due to a stronger Yen.
  • Brent Crude, the international oil benchmark lost almost 5% on fears of an economic slowdown that would lower demand.
  • Gold had increased by 5.3% to $1,325 which was its highest level in two years.
  • Other safe-havens like bonds had soared pushing yields to records lows, while safer currencies like the Yen and US Dollar had risen and are likely to keep rising.

Apart from the historic lows reached on Friday 24th, Brexit will continue to cause uncertainty and volatility in the markets. Experts at some of the biggest banks believe BoE could potentially cut interest rates or restart QE while the US FED will likely delay any possible interest rate hikes until later in the year. What we know for sure though, is that the referendum opened a can of worms and it is now up to everyone to muddle through as best they can.


Picture from MyEyeSees on flickr, original via flickr

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Reuters: Business News