Reuters reports: The $2.08 trillion wiped off global equity markets on Friday after Britain voted to leave the European Union was the biggest daily loss ever, trumping the Lehman Brothers bankruptcy during the 2008 financial crisis and the Black Monday stock market crash of 1987, according to Standard & Poor’s Dow Jones Indices.
Global markets skidded following the unexpected result from the June 23 referendum, in which Britons voted to withdraw from the EU by a 52 percent to 48 percent margin.
Markets in mainland Europe were hit the worst, with Milan .FTMIB and Madrid .IBEX each down more than 12 percent for their biggest losses ever. Britain’s benchmark FTSE 100 .FTSE was down nearly 9 percent at one point on Friday, but rallied to close down 3.15 percent.
The route started in Asia, with the Nikkei .N225 down 7.9 percent, and carried over into Wall Street as the S&P 500 fell 3.6 percent.
Mohit Bajaj, director of ETF trading solutions at WallachBeth Capital LLC in New York, said the severity of the sell-off was partly due to investors misreading the outcome and betting the wrong way. [Continue reading…]
Before Thursday’s vote, George Soros wrote: avid Cameron, along with the Treasury, the Bank of England, the International Monetary Fund and others have been attacked by the leave campaign for exaggerating the economic risks of Brexit. This criticism has been widely accepted by the British media and many financial analysts. As a result, British voters are now grossly underestimating the true costs of leaving.
Too many believe that a vote to leave the EU will have no effect on their personal financial position. This is wishful thinking. It would have at least one very clear and immediate effect that will touch every household: the value of the pound would decline precipitously. It would also have an immediate and dramatic impact on financial markets, investment, prices and jobs.
As opinion polls on the referendum result fluctuate, I want to offer a clear set of facts, based on my six decades of experience in financial markets, to help voters understand the very real consequences of a vote to leave the EU.
The Bank of England, the Institute for Fiscal Studies and the IMF have assessed the long-term economic consequences of Brexit. They suggest an income loss of £3,000 to £5,000 annually per household – once the British economy settles down to its new steady-state five years or so after Brexit. But there are some more immediate financial consequences that have hardly been mentioned in the referendum debate. [Continue reading…]
