British pound futures fell versus the dollar and Middle East stocks declined Sunday. Futures suggested the index would fall by 2.8 per cent.
Advertisement
John Wraight, head of United Kingdom rates strategy at UBS, said that after falls of such magnitude for sterling, a rebound should have been expected.
On Monday morning, Tokyo’s Nikkei 225 rose 1.6 percent to 15,201.49 points, rebounding at least temporarily from Friday’s 7.9 percent loss, its biggest since the 2008 financial crisis.
Tokyo led the way, rising 2.39 per cent. Shanghai rose 1.5 per cent and Sydney edged up 0.47 per cent. The greenback fell 0.5 percent to 101.680 yen after shedding 1.8 percent last week. Benchmarks in Singapore, the Philippines and Indonesia also fell.
Mr Osborne said he had been in contact with the governor of the Bank of England and other central banks, and that the government had “well thought through contingency plans” in the wake of the vote to leave the EU.
But many European leaders have warned that London can not retain its privileges following the decision to leave.
As David Cameron, who announced he would resign as Britain’s prime minister on June 24th, met with European leaders on Tuesday to discuss Britain’s exit from the EU, markets appeared to settle down.
Analysts said that though uncertainty reigned, investors hadn’t finished selling their assets yet.
“The EU’s legitimacy may be tested by separatist parties”, it said.
The huge fall saw the pound decrease in value, from $1.50 to $1.37 on Friday, and then even more over the weekend.
The dollar index .DXY , which measures the greenback against a basket of six major currencies, was last down 0.5 percent at 96.112, after posting its strongest two-day gain since September 2008 on Friday and Monday as traders sought the greenback for its relative safety. The S&P500, meanwhile, opened 1.6 per cent lower.
Crude oil prices regained some of their overnight losses after tumbling almost 3 percent on Monday. It plunged $2.50 on Friday.
Christine Lagarde, managing director of the International Monetary Fund, said that what happens next depends on how policymakers handle the fallout in the coming days.
The U.K’s vote to secede from the European Union spurred a flight to haven investments out of risk assets amid uncertainty over the implications of the decision and concern it could disrupt the global economic recovery.
“How they come out in the next few days is going to really drive the direction in which risk will go”, Lagarde said.
The financial markets did not panic Friday after the vote, Lagarde said.
Britain battled to stop worldwide Brexit alarm Monday but failed to prevent the pound crumbling to a three-decade low against the dollar as European shares took a fresh plunge.
“That’s the context in which we should look at market moves overnight”.
Still, the vote has far-reaching economic and political implications.
Nicola Sturgeon, leader of Scotland’s devolved government, has said a second Scottish independence referendum was “very much on the table”, because Scots mainly voted to stay in the EU.
Advertisement
Analysts said the tone from the summit would give an idea of how hard Britain’s negotiations will be once Article 50 of the EU’s Lisbon treaty, which governs the procedure for a country to leave, is triggered.
