US shares were set to rise on the open, with Dow and S&P 500 futures both up 1 percent. The German index tanked 10 percent, which would be its biggest one-day decline ever, and France’s index tumbled about 7 percent. Utility and phone companies are the best performing parts of the USA stock market over the last month, but they’ve weakened over the last few days as the “remain” campaign appeared to strengthen, making investors more willing to take on risk. Brent Crude, the benchmark for worldwide oil price, fell 5.8 percent, or $2.97, to $47.94 per barrel in London. The Nikkei 225 plummeted about 8 percent, its biggest fall since 2008. Markets had rallied on Thursday on hopes for a “remain” vote and bookies had given such an outcome a high probability of success. Britain’s decision to secede from the European Union is expected to rattle the trade bloc, and has fostered carnage in bank stocks early Friday morning.
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Earlier Friday, the chairman and chief executive of Goldman Sachs, Lloyd Blankfein, said the USA investment bank had “been focused on planning for either referendum outcome for many months”.
London is the world’s leading financial center and the vote to leave the European Union has triggered huge uncertainty about the future of its banking sector.
The Bank of England said it had made contingency plans for a “leave” vote and promised to take action to maintain stability.
That seemed to help confidence somewhat, particularly in financial stocks, which were among the hardest hit. “If we do not, Deutsche Bank will be unable to operate profitably or sustainably in an environment of low interest rates and increasingly strict regulation”. More losses are likely, with the bank saying that it is in talks with employee representatives regarding other divisions and infrastructure units in Germany.
RBS dipped more than 20 percent, Lloyds was down more than 25 percent, and BNP Paribas fell more than 19 percent. The S&P 500 Futures is down 2.3%, and European and Asian benchmarks are all sharply lower. An exit may send global shares tumbling, analysts say.
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In a statement issued later on Friday morning, Bank of England governor, Mark Carney said “the United Kingdom financial system can absorb any stresses” due to the high liquidity and capital reserves of its banks.
