Hit by Brexit global markets, pound crash
FollowGlobal markets buckled, with stocks plunging from Tokyo to London and Chicago, as the BBC projected a victory for the "Leave" campaign with most votes counted in Britain’s referendum on membership of the European Union said a report in Bloomberg. The pound fell the most in three decades.
Sterling tumbled 10 percent, the euro slid by the most since it was introduced in 1999 and the yen had its biggest surge since 1998. South Africa’s rand led losses among the currencies of commodity-exporting nations, sliding more than 6 percent as oil sank to about $47 a barrel and industrial metals slumped.
Gold soared with U.S. Treasuries as investors piled into haven assets. Futures on the FTSE 100 Index plunged with S&P 500 Index contracts as Asian stocks dropped by the most in five years.
“Brexit is now the base case,” said Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney, which manages about $21 billion. “Investors are just trying to get out. You sell first and ask questions later. There was a massive miscalculation of risk and now you’re seeing all that unwind.”
The debate over the U.K.’s EU membership has dominated investor sentiment in June, with appetite for riskier assets having built up over the past week as bookmakers’ odds suggested the chance of a so-called Brexit was less than one in four. It’s now become a certainty, Odds checker data show.
Central banks and governments have warned a British withdrawal from the EU would hurt global economic growth and trigger volatility in financial markets.
The dollar slumped briefly to 99.02 yen, the first time it has gone below 100 yen since November 2013, before edging back up slightly. The Japanese unit is considered a safe bet in times of uncertainty and turmoil.
Japan's Finance Minister Taro Aso will hold an emergency news briefing today. He has previously said Japan would closely watch the dollar-yen rate and act accordingly if the yen became too strong, indicating the government could intervene in currency markets.
A flight to safety also saw higher-yielding and emerging market currencies slump, with the Australian dollar down 3.2 percent, South Korea's won diving 2.4%, Malaysia's ringgit down 2.3% and the Indonesian rupiah shedding 1.7%.
The outcome has upturned expectations, which had been for a tight race narrowly won by the "remain", while bookmakers had said there was a 90% chance of staying in.
But as the shock results rolled in, equity markets went into meltdown.
Tokyo plunged more than eight percent in the afternoon, Sydney shed 3.7% and Seoul was 3.5% off. Shanghai sank 1.4% by lunch, while Taipei, Wellington, Manila and Jakarta all saw sharp losses.
Hong Kong tumbled 4.7% by the break with British banking giants HSBC and Standard Chartered both plunging more than 10%.
