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E Finance & Asian, European markets drop on news of Britains EU exit

2017-06-06 02:13 [NEWS] Source:Netword
Guide:Asian markets drop on news of Britains EU exit

International markets reeled on Friday as Britain voted to leave the European Union in a shock referendum result, with the value of the pound falling to its lowest level against the U.S. dollar since 1985.

As of early Friday morning in Britain, 52% of British voters had chosen to leave the EU and 48% to remain, marking a stunning victory for the country’s “leave” camp. 

The results threw Financial markets into turmoil. The pound plunged more than 10% against the dollar, to a 30-year low of below $1.34. Oil prices sank. And Stocks in Asia tumbled, with Japan's Nikkei index off more than 7%. 

Markets in Europe tanked too, with Britain’s FTSE 100 losing more than 8% after the opening bell. Investors in the U.S. were bracing for huge hits when markets open Friday as their stock futures were down sharply.

British Prime Minister David Cameron says he will step down after historic vote to leave European Union

Ginanne Brownell Mitic

Britons voted Thursday to leave the 28-nation European Union, a historic vote that sent shock waves across the continent and prompted Prime Minister David Cameron to announce that he will step down by October.

“The will of the British people is an instruction that must be delivered,” Cameron said...

Britons voted Thursday to leave the 28-nation European Union, a historic vote that sent shock waves across the continent and prompted Prime Minister David Cameron to announce that he will step down by October.

“The will of the British people is an instruction that must be delivered,” Cameron said...

(Ginanne Brownell Mitic)

"What we’re seeing now is the market reacting with complete shock and bewilderment as the results unfold," said Trevor Charsley of the foreign-exchange trading firm AFEX. "The market will now question the validity of the European project and the existence of the euro," he said, as the euro skidded against the dollar as well.

Singapore’s Straits Times Index, a bellwether for Southeast Asia, fell more than 2% on Friday.

“It’s predominately on the back of what’s happening in the U.K. — it’s the general volatility and uncertainty about what happens next," said Rahul Bajoria, a Southeast Asia economist with Barclays in Singapore. “Obviously there’s a great deal of integration within markets. If there are growth shocks emerging from the EU, it will spread out over time. The main channel is expected to be trade.”

Many analysts and economists have said that a vote to leave the European Union would probably push Britain into recession, with its annual economic output dropping 1% to 6% in coming years, although proponents for the “leave” campaign have disputed that. Many other nations in the EU will feel the pinch too, as Britain is the continent's second-largest economy, after Germany.

The European Central Bank, worried about a panic and possible run on the Financial system, has pledged to backstop markets. Britain's vote also will give the Federal Reserve more pause in raising interest rates in the U.S., as the results of the vote and ensuing period of uncertainty are expected to heighten volatility in Financial markets.

Asian markets also took a particularly strong hit on fears of global economic instability. Japan’s Nikkei index fell by 7.92% -- the most in 16 years -- while Hong Kong’s Hang Seng Index and Sydney’s S&P/ASX 200 dropped by about 3%.

“It looks like all of Asia went lower today,” said Liang Kuo-yuan, chairman of the Yuanta-Polaris Research Institute in Taipei, which focuses on Financial markets.

Britain votes to leave European Union

“The U.K. leaving the EU will cause all sorts of disturbances. Those disturbances have political and economic elements. [Foreign exchange] markets will immediately be affected,” he said.

“For Stocks, investors will feel sentiment is not good and will start to sell off,” he continued. “The global economy is always in a fragile situation. The disintegrated situation will make everyone nervous [about another country breaking away]. The long-term impact is something you can’t overlook.”

The Chinese yuan also dropped to its lowest level since January 2011, hitting a low of 6.6148 against the U.S. dollar.

(EDIT:admin)

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