Our lovely pound (GBP) fell to a three-decade low against the dollar Monday as European markets took a fresh hit, led lower by banks, airlines and property shares, despite the British government’s efforts to calm post-Brexit jitters.
Asian markets had steadied a little after Britain’s shock June 23 vote to abandon the European Union wiped $2.1 trillion off international equity values Friday.
But investors embarked on a new wave of selling in European trade followed by a heavy sell-off on Wall Street, as they grappled with the financial consequences of the Brexit referendum.
London’s FTSE 100 index, which boasts many international companies, fell 2.5 percent at closing, masking steeper falls in key sectors likely to be affected by Brexit.
Eurozone indices saw even bigger losses.
“They are being dragged down by the banking sector, which has nothing left to hold on to such is the considerable uncertainty,” analysts at the Aurel BGC brokerage said.
Before Europe’s markets had opened, Britain’s finance minister, George Osborne, had sought to reassure Britain and its international partners that the country “is ready to confront what the future holds for us from a position of strength”.
Britain’s economy is “as strong as could be”, he said.
Hours later, the pound skidded to $1.3194 in London trade, its lowest level against the dollar since September 1985, before a slight rebound.
“George Osborne’s comments have clearly prevented a much more dramatic decline Monday morning, but markets will remain incredibly volatile throughout the long-winded process of exiting the EU,” said Interactive Investor equity strategist Lee Wild in London.
Losses were especially acute in industries singled out by investors as most Brexit-vulnerable.
British budget airline EasyJet, which warned of a Brexit hit to sales, plunged more than 22 percent. Royal Bank of Scotland shares lost just over 15 percent, while British construction group Taylor Wimpey was also nearly 15 percent down.
The trend continued among US losses. Oil prices, meanwhile, also resumed their downturn.
“The decision by the British people has plunged world markets into a zone of major uncertainties. We are now entering uncharted waters,” economists at Groupama AM said.
In eurozone equity trading, Frankfurt’s DAX 30 index and the CAC 40 in Paris were both around 3.0 percent lower.
In Madrid, shares slipped 1.6 percent, frittering away early gains after the ruling conservative Popular Party emerged on top in elections Sunday and vowed to try to form a government.
It’s starting to look like Wall Street is set for another wild day on Monday.
Asian markets pushed higher this morning, while European markets were on pace to shave off 2% in Germany and England due to ongoing concerns about Thursday’s Brexit vote. Keep a close eye on the VIX S&P 500 Volatility Index – also known as the market’s fear gauge. On Friday, it roared more than 42%.
While the mainstream media is sure to talk about the Brexit voting results all day, a number of other stories and profit opportunities could slip under the radar.
So let’s get started with today’s top stock market news, stocks to watch, ways to profit, and economic calendar for June 27, 2016.
What’s Moving the Dow Jones Industrial Average Today: Brexit Worries Accelerate
Dow Jones futures projected a 125-point decline on Monday morning as concerns about Britain’s decision to depart the European Union continues to wallop the global markets. On Friday, the Dow Jones fell more than 600 points (a little more than 3%) after markets and analysts dramatically underestimated the possibility of a vote in favor of the Brexit. Of course, Money Morning Capital Wave Strategist Shah Gilani had been predicting since earlier this month that British voters would decide to leave the EU. And he offered investors several profitable plays that have generated a tidy gain. Here’s Shah’s latest commentary on why Brexit happened, and – more importantly – what the Brexit results mean for your money.
The Brexit vote is punishing European banking stocks and the broader financial sector. In early morning trading, shares of Barclays Plc. (NYSE ADR: BCS) Credit Suisse Group AG (NYSE ADR: CS), Deutsche Bank AG (USA) (NYSE: DB), and Royal Bank of Scotland Group Plc. (NYSE: RBS) were all seeing red. Britain’s decision to depart the EU will dramatically impact cross-border financial regulations, and investors can anticipate significant changes to banking laws in the wake of the decision.
While analysts and media hounds are howling about the Brexit and the possibilities of a stock market crash, investors are missing a chance to make incredible gains over the long term by tapping into one of the world’s most society-changing technologies. This technology is going to completely disrupt the international order in ways that the Brexit never could. Here’s more about this amazing opportunity.
Gold prices continue to rally in early morning hours, while gold producers are having some of their best trading days in years. But the real winner in the Brexit vote has been Bitcoin. The digital cryptocurrency continues to surge as investors take to safety. The thing is, Bitcoin prices are about to tick much higher thanks to a major event in the world of digital currency. Read about it right here.
Crude oil prices fell again in early hours as trader sentiment has turned negative in the wake of the Brexit vote and concerns about an oversupply in the global oil market. WTI crude oil was off 1.7%, while Brent crude slid 1.5%.