Stocks Crash After UK Vote to Quit EU Shocks Investors

“Expect weaker investment and thereby slower economic growth to persist during the 2-3 year negotiations to leave the European Union”, Deutsche Bank economists said in a Friday note. While U.S. investors didn’t suffer the same degree of selling as in Europe, history shows U.S. stocks aren’t completely insulated from big losses in overseas markets.

Futures for the Dow Jones Industrial Average YMU6, -3.72% fell as much as 700 points, and was most recently down 659 points, or 3.7%, to 17,245.

“The vote will definitely make it very hard for the [Federal Reserve] to raise rates this year, and in fact the [ Fed fund] futures are now giving better chances of a rate cut in the USA than a rate increase”.

At one point the British currency hit a 31-year low. It’s now trading down around 9% near $1.37.

The vote will also reorder European Union priorities and procedures; it will lose a major military and diplomatic power, and Frank-Walter Steinmeier, German foreign minister, commented, “This looks to be a sad day for Europe and for Britain”.

British secession left investors from Europe to Asia scrambling to tourniquet losses amid plunging equity prices. Putting to rest all the speculation that spread uncertainty in the world market lately, the Britons have said “Yes” to a Brexit. USA banks have big London operations.

The result led British Prime Minister David Cameron to issue his resignation this morning.

Jean-Claude Trichet, a former president of the European Central Bank, called the vote “an quake”.

Dividend stocks may even get a boost from Brexit. The pound traded 5.7 percent lower against the dollar at $1.3701. A broad gauge of European blue-chip stocks index sank around 6.5%.

Improved earnings reports from US companies could be good news for stocks, as they would make higher share prices justifiable on a price-earnings basis.

On the US front, the Federal Reserve says it is ready with dollar liquidity following the Brexit decision.

“Everybody’s obviously a little bit stunned”, said Andrew Sullivan, managing director of sales trading at Haitong International Securities in Hong Kong.

“I don’t think this is a catalyst that’s going to cause a bear market in this country at all”. Meanwhile, the yen surged, briefly trading below 100 yen to the dollar for the first time since November 2013. Gold jumped over 4%.

Pryce was watching the results come in at the London School of Economics, where the mood was very nervous. “There could be countless implications for the United Kingdom media and [related] sectors, but smaller companies such as independent labels, independent production companies and tech start-ups look set to be hardest hit”.

The results sent the pound on a wild ride.

Global stock markets are in sell-off mode and currencies are swinging wildly.

The reason? The decline of the pound and euro makes European products more competitive overseas. Observers wonder if other nations will follow in Britain’s footsteps by leaving the EU.

“This is simply unprecedented, the pound has fallen off a cliff and the FTSE is now following suit”.

A record number of voters registered to vote in the referendum. Polling before the referendum had indicated a vote too close to call.

Migration and economy dominated the debate. Campaigners for Britain to remain an European Union member say walking out of the biggest free trade area in the world would do irreparable damage to the economy.