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.