logo-loader

Markets crash after Britain votes for Brexit

Last updated: 23:08 24 Jun 2016 BST, First published: 18:08 24 Jun 2016 BST

British Airways

Fears that Britain's decision to exit the EU could destabilise the European community led to a massive sell-off on world stock markets.

The Dow Jones crashed 610 points, or 3.4%, to 17,401 and the broader-based S&P 500 tanked 76 points, or 3.6%, to 2,037.

The S&P 600 Small Cap index was hit just as hard as its bigger brother, tumbling 27 points, or 3.8%, to 692, and the mid-cap-focused S&P 400 fared worse still, plummeting 60 points, 0r 4%, to 1,458.

Banks were especially hard hit, with the Nasdaq Bank Index down 6%.

Brokers Charles Schwab Corp (NYSE:SCHW) and E*TRADE Financial Corp (NASDQQ:ETFC) both suffered double-digit percentage falls, while the airlines sector was another big loser, as evidenced by the 10.8% decline by American Airlines Group Inc (NYSE:AAL).


Mid-session

Losses on US markets lengthened as the morning session wore on, as investors get to grips with the changing political landscape in Europe.

Proving that the bookies don’t always get it right, the British electorate unexpectedly voted in favour of leaving the European Union (“Brexit”), bringing about the downfall of the country’s prime minister, David Cameron, in the process.

“In theory, Brexit should have few direct effects on the global economy because the UK economy accounts for only 4% of global GDP; however, there are also the indirect effects to consider,” opined Wells Fargo’s Economics Group.

“The tightening in financial markets that has occurred today, if maintained, could exert a slowing effect on economic activity in many economies. An eventual unravelling of the EU, although not very likely in the near term, cannot be completely discounted in a medium- to long-term framework. Geopolitical uncertainty could have a depressing effect on economic activity via weaker investment spending. We are not at the point where we would forecast a global recession based on Brexit, but we are prepared to adjust our views in coming weeks as events dictate,” the bank declared.

As stocks’ losses lengthened, the only consolation for battered US investors, wondering what relevance there was to US stocks of a family row over in Europe, was that UK stocks pared losses towards the end of the session.

There was little sign of that happening in the lunchtime session on Wall Street, as the Dow Jones surrendered 518 points at 17,493 and the broader-based S&P 500 collapsed to 2,050, down 64 points.

The mid-cap measure, the S&P 400 was down 55 points at 1,463, while the Russell 2,000, which tracks small-caps, was down 42 points at 1,130.

It was a good day to be long of gold, as the price of the yellow metal headed north, taking the likes of gold miners Barrick Gold Corp (NYSE:ABX) and Kinross Gold Corp (NYSE:KGC) with it, while silver miner Endeavour Silver Corp (NYSE:EKX), up 5.3%, also felt some love from investors.


Open

Stocks have taken an almighty clobbering after last night’s slightly surprising referendum result on the UK’s continued membership of the European Union.

The S&P 500 fell almost 50 points to around 2,062 in the first hour of trading, while the Dow Jones average was close to 400 points weaker at around 17,620.

Companies with exposure to the UK, particularly banks such as Bank of America, Citigroup and Morgan Stanley, have been especially hard hit.

Mid-caps have fared no better, with the S&P 400 2.6% weaker at 1,478. Small caps, which one might have expected to be less affected by events in Europe, are getting the treatment even harder than their bigger brethren, judging by the 2.9% fall on the Russell 2,000 index, at around 1,138.


Pre-open

US markets are set to take Britain’s decision to exit the European Union (EU) almost as hard as the UK stock market has.

Spread betting quotes point to a 500 point fall for the Dow Jones average at the outset, to around 17,500.

The S&P 500 is seen tumbling to around 2,042.5 from last night’s close of 2,113; that equates to a fall of 3.4%, not far off the 4.2% decline on the FTSE 100 index in Europe, after Britain’s Prime Minister David Cameron fell on his sword after leading the campaign for a vote in favour of the United Kingdom of Great Britain and Northern Ireland remaining in the EU.

The decision of the country with the world’s fifth largest economy to leave the economic grouping cold have serious ramifications for the European Union, and, given that Scotland and to a lesser extent Northern Ireland voted overwhelmingly to remain in the EU, it could also potentially lead to the break-up of the UK.

The markets clearly got this one wrong, and the pound has been plunging on the foreign exchange markets.

Gold, the haven for the risk averse, has risen almost 5% in response to the turmoil in international markets but the price of oil has gone the other way, with West Texas intermediate for August delivery down 4.5% and Brent crude of 4.7%.

On the corporate front, sports apparel and footwear seller Finish Line Inc (NASDAQ:FINL) was wanted ahead of the start of open outcry trading.

Despite reporting sharply weaker quarterly earnings, the figures came in ahead of market expectations.

Oriole Resources outlines 2023 achievements and future exploration plans

Oriole Resources PLC (AIM:ORR) CEO Tim Livesey and chief financial officer Bob Smeeton join Proactive's Stephen Gunnion with details of the company's 2023 financial and operational performance. Livesey highlighted successful exploration programs in Cameroon, at the Bibemi and Mbe projects,...

2 hours, 9 minutes ago