UK Politics Mega-thread - Page 119

Global markets buckled as Britain’s vote on European Union membership infected every asset class.

The pound plunged by a record and the euro slid by the most since it was introduced in 1999 as the BBC projected a victory for the "Leave" campaign with most votes counted in Britain’s referendum on membership of the European Union. South Africa’s rand led slides among the currencies of commodity-exporting nations as oil sank to about $47 a barrel and industrial metals slumped. The yen surged and gold soared with U.S. Treasuries as investors piled into haven assets. Futures on the FTSE 100 Index plunged with S&P 500 Index contracts as Asian stocks dropped by the most in five years.

“It’s scary, and I’ve never seen anything like it,” said James Butterfill, head of research and investments at ETF Securities, said by phone from London. “We’re going to see outflows from basically any kind of cyclical asset. A lot of people were caught out, and many investors will lose a lot of money.”

The debate over the U.K.’s EU membership has dominated investor sentiment throughout June, with appetite for riskier assets having built up over the past week as bookmakers’ odds suggested the chance of a so-called Brexit was less than one in four. The victory for the "Leave" campaign will fan speculation that more countries could withdraw from the EU and finance officials in the world’s biggest economies may intervene as reaction in financial markets proves reminiscent of late 2008, at the height of the global financial crisis.

At 5:11 a.m. London time, BBC projections showed voters backing “Leave” by 52 percent to 48 percent. U.K. Prime Minister David Cameron warned Brexit would tip the country into recession, while JPMorgan Chase & Co. and HSBC Holdings Plc warned such as outcome would lead them to move thousands of jobs out of London.

These are among the most notable moves in global financial markets:

British pound falls as much as 11 percent to $1.3229, weakest since 1985

Yen jumps 4.7 percent to 101.36 per dollar, after surging past 100 for first time since 2013

Japan’s Topix index leads Asian stock losses, down 7.9 percent

FTSE 100 Index futures tumble 8 percent; S&P 500 Index contracts slump as much as 5.1 percent, the maximum move allowed

Yield on 10-year Treasuries drops 29 basis points to 1.46 percent, set for biggest daily decline since 2009; similar Japanese yield reaches record-low minus 0.215

New York crude oil retreats 6.3 percent to $46.93 a barrel, poised for biggest loss since Jan. 20

Gold rallies as much as 8.1 percent to $1,358.54 an ounce, highest since March 2014

South Africa’s rand plunged 6.4 percent against the dollar and reached a record low versus the yen; Mexico’s peso slid 6.1 percent to 19.33, near its all-time low

Poland’s zloty dropped by the most since 1993

The iTraxx Asia index of credit-default swaps rose by the most in three months

The pound was down 9.8 percent as of 2:15 p.m. in Tokyo, more than double its previous record drop of 4.1 percent recorded in 1992, when the currency was was forced out of Europe’s exchange-rate mechanism.

“This is a very challenging situation but the reality is that market liquidity and overall liquidity in the U.K. is drying up as we speak in a very rapid way,” said John Woods, chief investment officer for Asia-Pacific at Credit Suisse Private Banking, told Bloomberg TV in Hong Kong. “It’s highly likely that we see monetary easing in a coordinated response” from central banks across the world, he said.


The euro slumped 3.8 percent, while currencies in Norway, Sweden and Turkey posted even steeper losses.

Japan’s currency jumped by the most since 1998 versus the dollar.

“All hell is breaking loose,” says Vishnu Varathan, a senior economist in Singapore at Mizuho Bank Ltd. “The only surefire is you buy yen, you buy U.S. Treasuries, you buy gold, and you sit tight."

Stocks
The MSCI Asia Pacific Index declined 4.3 percent as benchmarks retreated across the region.

British insurer Prudential Plc, HSBC and Standard Chartered Plc all slid more than 10 percent in Hong Kong. Glencore Plc tumbled 13 percent.

Commodities
The Bloomberg Commodity Index fell 2.1 percent, its biggest loss of the year.

Crude oil tumbled as much as 6.8 percent in New York. Copper and nickel dropped more than 3 percent in London. Gold was up 5.9 percent.

“Gold will be a preferred safe-haven asset with a ‘Leave’ vote,” said Barnabas Gan, an economist at Singapore-based Oversea-Chinese Banking Corp, who forecast that it could rally to as much as $1,400 if ‘Remain’ loses. Bullion’s expected to remain volatile until the final verdict is out, according to Gan.