EU Referendum – Initial Market Reaction

June 28th, 2016, by Martyn Torevell

Global investment markets reacted sharply to the British vote to leave the EU. Assets which are perceived as “safe havens” such as gold and certain government stocks rose in value, whilst peripheral Eurozone government debt and equity markets fell. Currency markets have been extremely volatile with the Pound losing value against the Dollar, Euro and Yen.

On the first day of trading after the vote the FTSE 100 index fell below 5,800 in early trading but recovered to end the day at 6,139, down 3.15% over the day. Markets have continued to fall today (Monday 27 June) with the FTSE 100 down by a further 2.6% to close at 5,982.

Global indices have followed a similar pattern. On Friday the S&P 500 index fell by 3.6%, whilst the Nikkei 225 index fell by 7.9%. European stock markets were particularly hard hit with the German DAX index down by 6.8% and the French CAC 40 index down by 8%. All of these returns are expressed in their local currencies. When currency movements are taken into account the S&P 500 and Nikkei were up in Sterling terms by 4.8% and 3.6% respectively, whilst European markets indices saw their losses reduced. European markets have continued to fall on Monday and American markets have fallen at the start of trading….

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