Brutal. That’s about the best way to describe the way markets have reacted since Thursday’s monumental decision by the British electorate to exit the European Union.
Sterling has plunged, markets around the globe have moved sharply lower, and government bonds continue to plumb new depths.
Amid one of the most dramatic spells for investors since the credit crunch, MRM is providing our own take on events, the first of which is below.
The Brexit-induced sell-off which started on Friday showed no sign of abating today, with the FTSE 100 closing down below 6,000 after shedding another 2.6%.
The UK’s blue chip index was dragged lower by diving bank stocks and housebuilders, both deemed to be in the firing line from the impending break-up with Europe.
Barrett Developments and Travis Perkins saw the worst of the losses for the housebuilders, off 19.4% and 16.8% respectively, although the whole sector is reeling from Thursday’s result.
Not to be outdone, banks also continued to capitulate amid rafts of downgrades from analysts. Barclays (which yours truly purchased on Thursday before the result was announced) finished down another 17.4% having endured not only heavy selling but also a temporary suspension during early trading, sparked by automatic circuit breakers which kick-in following a fall of more than 8%.
Royal Bank of Scotland joined in, shedding 15.1%, while the challenger banks also succumbed to the near-panic sweeping through the sector, with Shawbrook and Virgin Money among the biggest fallers.
However, easyJet managed to lead the loser board after a bleak update issued this morning warned of the dual impact of strikes in France and congestion issues over the past two months, as well as the expected impact of the Brexit decision. Investors opted to take profits rather than stick it out on a stock which had been soaring, with the carrier finishing the session down some 22.3%.
Overseas markets continued to tumble in unison, with the US’ S&P 500 off 1.7% as London closed, while European shares also dived, with the German Dax closing down 3% and Spain’s Ibex 1.8% weaker.
In currency markets, the pound continued to sell-off at a rate not seen since the days of the ERM debacle. It dropped another 3.5% today against the US dollar to leave it at its lowest level for 30 years.
Where does it stop? Nobody knows yet, but it’s not all doom and gloom. Government bonds have been a big beneficiary, and indeed today saw yet a new low for UK gilts, with yields falling below 1% for the first time ever.
Meanwhile, gold continues to surge, trading at $1,329. A month ago it was some 10% lower.
Tune in tomorrow for the next instalment.
To read our top ten tweets that shaped today’s news, click here.