In volatile trading, Asian stock markets fell sharply on Friday with Tokyo stocks, USA futures and oil prices plunging as the early results in Britain’s referendum challenged the earlier anticipation that Britain would remain in the European Union. Investors bought stocks and sold bonds, sending bond yields and banks higher.
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In the U.S., the Dow Jones industrial average closed up 1.29% or 230.24 points at 18,011.07.
The Dow Jones industrial average rose 155 points, or 0.9 percent, to 17,937. The Nasdaq composite sank 158 points, or 3.2 percent, to 4,751.
World financial markets were rocked in the immediate aftermath on Friday by Britain’s unprecedented vote.
The decline came on fears the Britons’ decision to leave the European Union could hurt investment and usher in many months of both political and economic uncertainty.
“People are expecting that Britain is going to vote to stay in the European Union based on what’s happening here, particularly with the fact that financials are leading”, said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois. “When you add to it the specter of the last couple of years of terrorism it causes the average individual.to be more nationalistic, more populist, more protectionist”.
Bond prices surged and yields fell.
Sterling fell as low as $1.4351 GBP= against the dollar, more than wiping out all its gains that had lifted it above $1.50 for the first time this year on the back of an earlier YouGov opinion poll that suggested Britons had voted 52-48 percent to stay in the EU.
Banks took the largest losses by far.
METALS: The price of gold fell $6.90 to $1,263.10 an ounce, and it’s down nearly 3 percent over the last five days. They have the most to lose in Britain’s departure from the European Union because they do a lot of cross-border business in Europe based from their offices in London.
Away from the Brexit debate, Norway’s crown jumped to a 10-day high as its central bank kept interest rates steady. The Standard & Poor’s 500 index gained 16 points, or 0.8 percent, to 2,101. DuPont gave up $3.24, or 4.7 percent, to $65.97 and LyondelBassel Industries lost $4.17, or 5.3 percent, to $74.88.
In addition to bonds, other safety assets also soared. S&P futures plunged 1.6 percent while Dow futures slid 1.1 percent. That’s its highest price since July 2014. Citigroup plummeted $3.61, or 8.1 percent, to $40.85 and Bank of America fell 79 cents, or 5.6 percent, to $13.25. The moves sent mining stocks higher.
The S&P 500 closed 0.8 per cent below its record closing high hit May previous year. The pound had been trading at its highest level of the year around $1.50 on Thursday ahead of the referendum results. Duke Energy rose 82 cents, or 1 percent, to $82.87 and Consolidated Edison gained $1.45, or 1.9 percent, to $78.31 while Verizon added 32 cents to $55. The pound hit its lowest level in three decades. At one point, it was 8 percent lower. Energy companies are up with the price of oil.
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With investors optimistic about a victory for Britain’s Remain campaign, the CBOE Volatility index fell 18.5%, its largest daily percentage decline since October 2013.
