On 23rd June Britain held an EU referendum and the result shocked the world. Brits have decided to leave the European Union. As a result, the fear seized world markets and worldwide panic similar to the one in 2008 appeared.
The first major stock exchange to open after the Brexit was Tokyo Stock Exchange. The Nikkei .N225 fell 7.9% on Friday after Britain voted to leave the European Union. Hong Kong’s major index Hang Seng fell 2.9% on Friday after having dipped 5.8% by late morning. Later, european markets opened. Dax lost 6.8% and FTSEurofirst 300 dipped 6.4%. London’s index of blue-chip companies FTSE 100 closed down 3.2% after crumbling almost 9% in the morning. American stocks suffered as well. The S&P 500 fell 3.6% and suffered its biggest one day drop since August, leaving it below where it finished in 2015. Dow Jones industrial average tumbled 611 points, or 3.4%, to close at 17,400. The Nasdaq composite fell 4.1%.
British banks and building societies stocks suffered as expected. Lloyds and Royal Bank of Scotland lost 21% and 17% respectively. Stocks of Barclays, one of the biggest banks in the UK, fell 16%. Other world banks suffered as well. For example, the Hong Kong-listed shares of HSBC and those of Standard Chartered plunged 10% at one stage.
The British pound has suffered its biggest one-day selloff in recent history after the referendum results sparked panic in the markets. Sterling suffered a jaw-dropping plunge in the early hours of Friday in London, from $1.50 against the US dollar to just $1.33 closing at $1.368. The currency’s weakness was widespread, with a 11 per cent decline versus the yen and a 5.8 per cent drop against the euro.
Brexit had huge impact on the world markets as we predicted in our previous article here. According to the Guardian, Brexit panic wiped $2 trillion off world markets. Moreover, the probability of 2016 world depression increased significantly after the results of the EU referendum were released.