Global stock markets lost about $2 trillion in value on Friday after Britain voted to leave the European Union, while sterling suffered a record one-day plunge to a 31-year low and money poured into safe-haven gold and government bonds.
Advertisement
Kenya’s central bank said it was ready to temper market volatility, while counterparts including Thailand said they were monitoring the situation in their locations.
Deutsche, which launched a new mobile banking app this spring, said it will invest around 750 million euros in digital products and advisory services over the next four years, noting that for millenials, “digital services have become the most important factor in choosing a bank” and that only around half of its customers come to a branch even just once a year. Phone companies, also traditionally safe investments, took much smaller losses than other industries. Spot gold rose almost 4 percent and the yield on the benchmark 10-year U.S. Treasury note fell to a low of 1.406 percent, last seen in 2012, though it climbed higher in afternoon trading.
Stocks tumbled in Europe. JPMorgan fell 7 per cent, Citigroup fell 9.4 per cent and Morgan Stanley dropped 10.2 per cent. Bank of America lost 7.4 per cent. Italy’s Unicredit (CRDI.MI) fell 24 percent while Spain’s Banco Santander (SAN.MC) fell 20 percent. Britain’s FTSE 100 fell 3.1 percent, with homebuilders suffering huge losses. The index closed up 2 per cent for the week for its best weekly gain in over two months.
More than 80% of the layoffs will be in its private and commercial clients division, which Deutsche Bank said it is revamping to “deliver high-quality service while expanding new forms of digital services”. “In the end, when markets start to settle down, I think they are going to realize that this is not the end of the world”. The blue-chip Dow Jones Industrial Average was poised to open down more than 500 points.
MSCI’s all-country world stock index fell 4.8 per cent. However, there’s no doubt that the uncertainty created by the referendum’s results will be a challenge.
As the polls closed Thursday, U.K. Independence Party leader Nigel Farage set a downbeat tone for the supporters of a British exit – or Brexit – from the European Union, telling Sky News television “it looks like “remain” will edge it” in the referendum, sending the pound to a 2016 peak of $1.50 US.
Japan’s Nikkei 225 plummeted 7.6 percent to 15,002.84 while South Korea’s Kospi sank 3.8 percent to 1,911.13.
Sterling was last down 8.3 per cent at $1.3642, having carved out a range of $1.3228 to $1.5022. The fall was even larger than during the global financial crisis and the currency was moving two or three cents in the blink of an eye.
Central banks stepped in to bolster confidence, promising to inject liquidity where needed and appearing to mitigate some of the sharpest losses.
The shockwaves affected all asset classes and regions. The pound is now worth $1.48 against the dollar, far above the $1.41 it fetched a week ago as traders anxious that a British departure from the European Union would weaken the country’s economy. The dollar’s peak decline of 4 per cent was the largest since 1998. Poland saw its zloty slump 4 percent.
Bond prices surged and yields fell. They had been 5-1 only hours earlier, as polls pointed to a “remain” win.
IMMIGRATION ISSUES: The estimated 3 million or so European Union citizens living in Britain aren’t likely to be thrown out overnight, but they could be faced with new rules and new paperwork – potential restrictions that have made many anxious, according to immigration lawyer Colin Yeo.
On the other side of the risk spectrum, yields of government bonds in the periphery of Europe rose sharply, led by a 35 basis point rise in Portugal’s 10-year yield to 3.4 percent.
Across the Atlantic, investors were pricing in less chance of another hike in United States interest rates given the Federal Reserve had cited a British exit from the European Union as one reason to be cautious on tightening.
GOLD: The price of gold climbed for seven days in a row and reached its highest price in more than a year last week as worries about the vote increased.
“Corrections are likely to be fairly shallow in oil because prices will be supported by the fact a balanced market is firmly on the horizon”.
Advertisement
Benchmark U.S. crude plunged 5.3 per cent, or $2.62, to $47.49 per barrel in NY. Officials in Gibraltar said nearly 84 percent of eligible voters turned out to cast ballots; witnesses and reporters elsewhere said turnout was higher than in last year’s general election, which was 66 percent.
