UK Leaves EU - Markets in Free Fall
The British people have voted to leave the European Union after a historic referendum in which they rejected the advice of the main Westminster party leaders and instead took a plunge into the political unknown.
The decision in favour of Brexit, following a bitterly close electoral race, represents the biggest shock to the political establishment in Britain and across Europe for decades, and will threaten the leaderships of both the prime minister, David Cameron, and the Labour leader, Jeremy Corbyn.
The value of the pound swung wildly on currency markets as initial confidence among investors expecting a remain vote was dented by some of the early referendum results, triggering falls of close to 9% and hitting its lowest level against some foreign currencies since 1985. Jeremy Cook, chief economist and head of currency strategy at WorldFirst, said: “Sterling has collapsed … It can go a lot further as well.”
S&P500 is down 5% and the ASX200 fell 3.5% and Aussie Banks are wearing bigger losses with Westpac the worst down 8.5%.
The reaction is very much a knee-jerk reaction to the uncertainty of what happens next. As advisers, we recommend that staying firm with your asset positions and ride out the storm. It is inevitable that emotion has taken over commonsense. Now is a great time to be buying not selling!