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FTSE 100 closes 4% lower in global market sell-off as Brexit recession looms - live FTSE 100 closes 4% lower in global market sell-off as Brexit recession looms - live
(35 minutes later)
8.33pm BST
20:33
Sam Thielman
Financial markets need to get used to a lot more volatility, following Britain’s decision to leave the EU.
Peter Kenny, senior market analyst for Wall Street firm Global Markets Advisory Group, says:
“This bleeds through the EU narrative in terms of its unity and its popularity,”
Kenny said the unease in the markets would likely keep the Fed from raising rates in the short term, and in the long term the consequences would be far-reaching.
Right now, Kenny said, the IMF and other international banks have to “play defense” as they tries to calm down markets – Kenny pointed to the IMF’s conference call last week in which it played down the chance of market downturns across multiple regions.
But the fact is that those markets will be uneasy for a long time to come.
“[That volatility] is something the market’s going to have to transition from thinking of as a variable to something it thinks of as a constant.”
8.30pm BST
20:30
No surprise what our friends at the Financial Times have splashed on, for tomorrow’s edition:
Just published: front page of the Financial Times, US edition, Saturday 25 June pic.twitter.com/q8Z0xB98Ms
8.22pm BST
20:22
There are some anxious faces on Wall Street today, as shares are hit by the Brexit shock:
8.16pm BST
20:16
The economic turmoil which the UK referendum could trigger could make it very hard for the US central bank to raise interest rates this year.
Here’s John Praveen, chief investment strategist of Prudential International Investments:
With Brexit vote, Fed unlikely to raise rates in 2016 on increased financial turmoil, UK in recession, weaker Eurozone & global growth.
8.08pm BST
20:08
Wall Street foreign exchange analyst Marc Chandler believes the pound will keep sliding in the weeks ahead:
BBH's @marcmakingsense says there's another 10-15% depreciationt to come for $GBP and stabilization isn't on the cards just yet. #FX
8.01pm BST
20:01
Obama: special relationship will endure
Barack Obama, president of the United States, has declared that America’s ‘special relationship’ will survive the EU referendum result.
He also argued that the Brexit vote is part of a broader picture, of the ‘ongoing changes and challenges’ raised by globalisation.
Reuters has the story:
U.S. President Barack Obama said on Friday that he had spoken with British Prime Minister David Cameron about Britain’s decision to leave the European Union and that he was confident the United Kingdom was committed to an orderly transition.
“While the UK’s relationship with the EU will change, one thing that will not change is special relationship that exists between our two nations,” Obama said in a speech at a global entrepreneurs conference at Stanford University.
“That will endure. The EU will remain one of our indispensable partners.”
During the referendum campaign, President Obama warned that Britain will be at the ‘back of the queue’ for a US trade deal, if it quit Europe. Voters didn’t heed that warning, so now we must wait to see how negotiations play out.
7.47pm BST7.47pm BST
19:4719:47
The Paris-based OECD economic thinktank had warned, repeatedly, against voting for Brexit - predicting that families would be hit in the pocket.The Paris-based OECD economic thinktank had warned, repeatedly, against voting for Brexit - predicting that families would be hit in the pocket.
But now the deed is done, it wants to help Britain through the difficult times ahead:But now the deed is done, it wants to help Britain through the difficult times ahead:
OECD Secretary-General Angel Gurría says:OECD Secretary-General Angel Gurría says:
“Yesterday’s vote on the United Kingdom’s membership of the European Union has major consequences for the UK itself, the EU and the international community. While it is on the public record that this was not the OECD’s recommended course of action, the focus must now shift to dealing with the outcome of this democratic process.“Yesterday’s vote on the United Kingdom’s membership of the European Union has major consequences for the UK itself, the EU and the international community. While it is on the public record that this was not the OECD’s recommended course of action, the focus must now shift to dealing with the outcome of this democratic process.
The OECD will spare no efforts in supporting the Government of the United Kingdom to make the transition as smooth as possible and advance the country’s economic and social agenda.The OECD will spare no efforts in supporting the Government of the United Kingdom to make the transition as smooth as possible and advance the country’s economic and social agenda.
The OECD also wants to support the “European project”, as it faces the biggest crisis in its history:The OECD also wants to support the “European project”, as it faces the biggest crisis in its history:
We will also help the European Union and the international community best address the consequences of such a decision and chart the way forward. The OECD believes that openness, integration and diversity will make our economies and societies stronger and fairer. Thus, we will continue to support the European project while further reflecting on how to strengthen well-being and inclusiveness, both within our countries and globally.”We will also help the European Union and the international community best address the consequences of such a decision and chart the way forward. The OECD believes that openness, integration and diversity will make our economies and societies stronger and fairer. Thus, we will continue to support the European project while further reflecting on how to strengthen well-being and inclusiveness, both within our countries and globally.”
7.43pm BST7.43pm BST
19:4319:43
S&P 500 erases 2016 gainsS&P 500 erases 2016 gains
7.42pm BST7.42pm BST
19:4219:42
Stock markets across the Americas are deep in the red, from New York to Sao Paulo.Stock markets across the Americas are deep in the red, from New York to Sao Paulo.
The Dow Jones hasn’t managed to rally, and is down almost 600 points, or 3%.The Dow Jones hasn’t managed to rally, and is down almost 600 points, or 3%.
The tech-heavy Nasdaq is deeper, down 4%, with only three stocks rising.The tech-heavy Nasdaq is deeper, down 4%, with only three stocks rising.
And the Dow, and the S&P 500, are now negative for 2016.And the Dow, and the S&P 500, are now negative for 2016.
7.30pm BST7.30pm BST
19:3019:30
Sterling is still being buffeted in late trading in America, trading at a seven-year low.Sterling is still being buffeted in late trading in America, trading at a seven-year low.
The pound is currently bobbing around $1.368 against the US dollar, a loss of 12 cents or 8% today. That’s its weakest level since the 2008-09 financial crisis.The pound is currently bobbing around $1.368 against the US dollar, a loss of 12 cents or 8% today. That’s its weakest level since the 2008-09 financial crisis.
That’s a small recovery on the $1.33 we ploughed early this morning, when markets were first reeling from the Brexit news.That’s a small recovery on the $1.33 we ploughed early this morning, when markets were first reeling from the Brexit news.
But it’s still the pound’s biggest one-day fall ever, and the third biggest slump for any currency in the last 40 years (as we covered at 2pm BST).But it’s still the pound’s biggest one-day fall ever, and the third biggest slump for any currency in the last 40 years (as we covered at 2pm BST).
This graph, from Reuters’ Eric Burroughs, shows the unprecedented scale of the selloff.This graph, from Reuters’ Eric Burroughs, shows the unprecedented scale of the selloff.
One more historic snapshot on GBP daily moves as we near end of 24-hour trading day pic.twitter.com/IROGmuVSJnOne more historic snapshot on GBP daily moves as we near end of 24-hour trading day pic.twitter.com/IROGmuVSJn
7.05pm BST7.05pm BST
19:0519:05
Important point: Although the Footrsie “only” fell by 4%, that doesn’t recognise the 8% tumble in the value of the pound.Important point: Although the Footrsie “only” fell by 4%, that doesn’t recognise the 8% tumble in the value of the pound.
One reason shares rallied from their lowest point is that US investors were able to snap up stakes in top UK firms at bargain prices, due to the rallying dollar.One reason shares rallied from their lowest point is that US investors were able to snap up stakes in top UK firms at bargain prices, due to the rallying dollar.
Everyone saying "that wasn't too bad today for the FTSE 100"... Try looking at it in dollar terms.Everyone saying "that wasn't too bad today for the FTSE 100"... Try looking at it in dollar terms.
6.50pm BST6.50pm BST
18:5018:50
These companies suffered most from Brexit voteThese companies suffered most from Brexit vote
Shares in Britain’s housebuilders slumped by more than a quarter today, as investors anticipated that the UK economy could be dragged into recession.Shares in Britain’s housebuilders slumped by more than a quarter today, as investors anticipated that the UK economy could be dragged into recession.
Taylor Wimpey, Persimmon, and Barratt - three big UK building firms - were the worst-performing major companies in LondonTaylor Wimpey, Persimmon, and Barratt - three big UK building firms - were the worst-performing major companies in London
Banking stocks, which also track Britain’s economic prospects - and fears of another financial crisis - also suffered heavy losses.Banking stocks, which also track Britain’s economic prospects - and fears of another financial crisis - also suffered heavy losses.
Here are the biggest fallers on the blue-chip FTSE 100 inded, which helped to drag ti down by 199 points or 3.15% today.Here are the biggest fallers on the blue-chip FTSE 100 inded, which helped to drag ti down by 199 points or 3.15% today.
Some shares rallied though. Gold miner Randgold, and silver maker Fresnillo, both rallied - matching the jump in precious metals prices.Some shares rallied though. Gold miner Randgold, and silver maker Fresnillo, both rallied - matching the jump in precious metals prices.
And companies who trade with international markets, such as smartphone chip maker ARM and pharmaceutical firm AstraZeneca, also roseAnd companies who trade with international markets, such as smartphone chip maker ARM and pharmaceutical firm AstraZeneca, also rose
Laith Khalaf, senior analyst at Hargreaves Lansdown:, explains:Laith Khalaf, senior analyst at Hargreaves Lansdown:, explains:
‘It’s been a roller coaster day on the markets, containing shock, fear and opportunism.‘It’s been a roller coaster day on the markets, containing shock, fear and opportunism.
The Footsie started the day in full retreat, but subsequently recovered as investors sniffed a chance to pick up some cheap stocks.The Footsie started the day in full retreat, but subsequently recovered as investors sniffed a chance to pick up some cheap stocks.
A significant number of FTSE 100 stocks ended the day in positive territory, predominantly those companies with lots of overseas earnings, which stand to benefit from a weaker pound.A significant number of FTSE 100 stocks ended the day in positive territory, predominantly those companies with lots of overseas earnings, which stand to benefit from a weaker pound.
6.00pm BST6.00pm BST
18:0018:00
In the wake of the Brexit vote, European Council president Donald Tusk has sent a letter to council members ahead of meetings next week. And it will make uncomfortable reading for UK prime minister David Cameron. Here’s a flavour:In the wake of the Brexit vote, European Council president Donald Tusk has sent a letter to council members ahead of meetings next week. And it will make uncomfortable reading for UK prime minister David Cameron. Here’s a flavour:
I have no doubt that due to the negative outcome of the UK referendum we will mostly need to devote our European Council to a discussion on its political consequences. It is my intention to ensure that we have sufficient space to debate both with Prime Minister Cameron, and then separately with the 27 Heads of State or Government.I have no doubt that due to the negative outcome of the UK referendum we will mostly need to devote our European Council to a discussion on its political consequences. It is my intention to ensure that we have sufficient space to debate both with Prime Minister Cameron, and then separately with the 27 Heads of State or Government.
And after discussing the agenda for the rest of the meeting, Tusk writes:And after discussing the agenda for the rest of the meeting, Tusk writes:
We will then move to dinner, where Prime Minister Cameron will explain the situation in the UK after the referendum, followed by a first exchange of views. This will mark the end of our meeting on Tuesday.We will then move to dinner, where Prime Minister Cameron will explain the situation in the UK after the referendum, followed by a first exchange of views. This will mark the end of our meeting on Tuesday.
And the following day, no invitation for Cameron:And the following day, no invitation for Cameron:
On Wednesday the 27 Heads of State or Government will meet informally to discuss the political and practical implications of ‘Brexit’. First of all, we will discuss the so called ‘divorce process’ as described in Art. 50 of the Treaty. And secondly, we will start a discussion on the future of the European Union with 27 Member States.On Wednesday the 27 Heads of State or Government will meet informally to discuss the political and practical implications of ‘Brexit’. First of all, we will discuss the so called ‘divorce process’ as described in Art. 50 of the Treaty. And secondly, we will start a discussion on the future of the European Union with 27 Member States.
5.43pm BST5.43pm BST
17:4317:43
European markets slump after Brexit voteEuropean markets slump after Brexit vote
With the uncertain future following the UK vote to leave the European Union, and an 8% fall in sterling against the dollar, investors sold off shares, with banks, housebuilders and airlines hard hit, but gold and silver miners in demand.With the uncertain future following the UK vote to leave the European Union, and an 8% fall in sterling against the dollar, investors sold off shares, with banks, housebuilders and airlines hard hit, but gold and silver miners in demand.
Markets came off some of their worst levels, however, as central banks from the Bank of England to the Fed queued up to reassure that they would provide any liquidity that was needed.Markets came off some of their worst levels, however, as central banks from the Bank of England to the Fed queued up to reassure that they would provide any liquidity that was needed.
And the FTSE 100 outperformed European peers, with exporters in particular helped by the fall in the pound.And the FTSE 100 outperformed European peers, with exporters in particular helped by the fall in the pound.
In fact the UK index, down 3.15% on the day, is actually up 1.95% on the week, benefitting from its earlier gains when it appeared the Remain camp would win the day.In fact the UK index, down 3.15% on the day, is actually up 1.95% on the week, benefitting from its earlier gains when it appeared the Remain camp would win the day.
The final scores showed:The final scores showed:
On Wall Street, the Dow Jones Industrial Average is currently down 508 points or 2.82%, its worst daily performance (so far) since January.On Wall Street, the Dow Jones Industrial Average is currently down 508 points or 2.82%, its worst daily performance (so far) since January.
5.17pm BST5.17pm BST
17:1717:17
Among the falls in European markets, Italy’s FTSE MIB has slumped by 12.48%, its biggest one day decline since its records began in 1998. Fears that EU members like Italy may hold their own vote was part of the reason, along with a hefty fall in banking shares on renewed concerns about their balance sheets if Brexit leads to another economic downturn.Among the falls in European markets, Italy’s FTSE MIB has slumped by 12.48%, its biggest one day decline since its records began in 1998. Fears that EU members like Italy may hold their own vote was part of the reason, along with a hefty fall in banking shares on renewed concerns about their balance sheets if Brexit leads to another economic downturn.
4.51pm BST4.51pm BST
16:5116:51
The Brexit vote is not a Lehmans moment, according to Oxford Economics. It said:The Brexit vote is not a Lehmans moment, according to Oxford Economics. It said:
The surprise vote in the UK to quit the EU has seen sharp falls in world financial markets. These reactions are out of line with any likely impact on the UK economy from the vote; markets are instead pricing in a high risk of a broader financial crisis engulfing the rest of the EU. This risk looks exaggerated to us.The surprise vote in the UK to quit the EU has seen sharp falls in world financial markets. These reactions are out of line with any likely impact on the UK economy from the vote; markets are instead pricing in a high risk of a broader financial crisis engulfing the rest of the EU. This risk looks exaggerated to us.
Today’s sharp drops in global stock markets and periphery bonds are hard to square with the likely long-term impact on the UK – at worst a few percent of GDP in the long run in an economy that is only 3.5% of world output. Initial market reactions were of similar magnitude to the immediate aftermath of the Lehman Brothers failure in 2008.Today’s sharp drops in global stock markets and periphery bonds are hard to square with the likely long-term impact on the UK – at worst a few percent of GDP in the long run in an economy that is only 3.5% of world output. Initial market reactions were of similar magnitude to the immediate aftermath of the Lehman Brothers failure in 2008.
It appears markets are pricing in a moderate risk that the UK vote is a systemic event that leads to a political chain reaction in the rest of the EU that collapses the single currency area and/or leads to debt restructuring in the Eurozone ‘peripherals’ – a re-run of the 2011-12 crisis.It appears markets are pricing in a moderate risk that the UK vote is a systemic event that leads to a political chain reaction in the rest of the EU that collapses the single currency area and/or leads to debt restructuring in the Eurozone ‘peripherals’ – a re-run of the 2011-12 crisis.
The possibility of such a chain reaction has probably gained credence in recent weeks with polls suggesting discontent with the EU in countries such as the Netherlands and Italy. In Italy, as well as a large debt stock there is also the issue of high bad debts at banks as a systemic risk factor.The possibility of such a chain reaction has probably gained credence in recent weeks with polls suggesting discontent with the EU in countries such as the Netherlands and Italy. In Italy, as well as a large debt stock there is also the issue of high bad debts at banks as a systemic risk factor.
We think these market concerns are overdone. We do not see a high chance of a systemic crisis in the EU involving other countries exiting the EU quickly or a sovereign debt restructuring – especially as the ECB has the capacity to step in to prevent a runaway rise in peripheral bond spreads, as it did in 2012. We also think the EU could take steps to avoid break-up spreading including by concessions to member states on the migration issue.We think these market concerns are overdone. We do not see a high chance of a systemic crisis in the EU involving other countries exiting the EU quickly or a sovereign debt restructuring – especially as the ECB has the capacity to step in to prevent a runaway rise in peripheral bond spreads, as it did in 2012. We also think the EU could take steps to avoid break-up spreading including by concessions to member states on the migration issue.