Brexit – Britain voted to leave the European Union, the pound falls to a record low and the Euro slid to its lowest since its introduction since 1999. The South Africa rand falls among other currencies of commodity exporting nations as oil fall to about $47 per barrel and industrial metals plunged. The yen rose as gold soared with sovereign debt as investors piled into safe haven. The futures of the European and US market falls as well as the Asian stocks which is its lowest in 5 years.
James Butterfill, the head of the Research and Investment at ETF Securities said “We’re going to see outflows from basically any kind of cyclical assets. A lot of people were caught out and many investors will lose a lot of money.” The debate over Brexit has dominated the sentiments of investors in the month of June, with riskier assets building up over the past couple of weeks. Now that Britain has is leaving the European Union, there are speculations that more countries could also d the same. The Central Banks are getting ready to intervene as reactions in the financial market prove reminiscent of late 2008, at the height of the global financial crisis.
The news came in the early hours of this morning with 52% of the voters backing Brexit and 48% going the opposite direction. The United Kingdom Prime Minister David Cameron warned that Brexit could tip the nation into a recession; Firms such as JP Morgan & Co. said that Brexit could lead them to move thousands of jobs out of London. The S&P Global Ratings predicts the United Kingdom to lose its AAA rating.
The pound plunged by 7.1% as of the early hours of this morning in London, this is the biggest loss in a day it has suffered prior to 4.1% recorded in 1992. The Euros slumped by 3.2%, countries such as Norway, Sweden and Turkey suffered greater losses. The Yen rose against the dollar by 3.7%. The MSCI Asia Pacific Index plunged by 4.3%, firms such as HSBC and Standard Chartered Plc also plunged by more than 9%, Glencore Plc tumbled by 12% . Crude oil fell by 6.8% in New York, the price of Copper and Nickel fell by 2.5%, but the price of Gold is up by 5.2%.