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Moody's cuts UK credit outlook, as markets slide after Brexit vote - live Moody's cuts UK credit outlook, as markets slide after Brexit vote - live
(35 minutes later)
11.24pm BST
23:24
The record 8%-ish slump in the pound on Friday has raised fears that UK inflation could spike (as imports will cost more).
That would be bad news for poorer citizens, says the IPPR thinktank tonight.
Using Treasury modelling of currency shocks, IPPR finds that a 2.3 percent increase in CPI will increase costs for the poorest households by 3.3 per cent, compared to a 1.6 per cent increase for the richest 10 percent of families.
This chart shows how those with less money suffer more from rising living costs:
11.10pm BST
23:10
It’s 15 short (?!) hours since London’s stock markets opened, in a massive wave of selling that briefly wiped 550 points off the FTSE 100.
Our Jill Treanor and Simon Goodley were watching events unfold in the City, while we stared open-mouthed at our Reuters terminals in the news room.
Here’s their report on the action:
Related: A rollercoaster ride for City traders on EU referendum night
And here’s a flavour of a truly wild day...
On the dealing room of the financial trading firm IG, clients were calling in a state of near panic. One, who had a profitable position on Barclays shares when the market closed on Wednesday night, was now not only in the red but facing the indignity of being asked to deposit more cash into his account.
Another told his dealer it was the end of the world.
By 7am Chris Beauchamp, IG’s chief market analyst, was worrying about the effect on markets if the prime minister, David Cameron, did not hold on to his job until the afternoon.
“Sterling now will depend on the shape of the UK government at about 4pm and if Cameron is still there,” he said. “If he says he’s going it will be sold off again. The best thing he can do is hold the line here. We also have Spanish elections this weekend. To lose one government would be unfortunate. To lose two would be careless.”
10.25pm BST10.25pm BST
22:2522:25
Germany’s Bild says Britain’s decision is a Black day for Europe:Germany’s Bild says Britain’s decision is a Black day for Europe:
BILD: OUTsch! #tomorrowspaperstoday #bbcpapers pic.twitter.com/BSGNu8LakFBILD: OUTsch! #tomorrowspaperstoday #bbcpapers pic.twitter.com/BSGNu8LakF
Bild had made a last-ditch attempt to sway UK voters, promising to reserve sun loungers for Brits, and even recognise Geoff Hurst’s ‘on-the-line’ goal at the 1966 World Cup. To no avail.Bild had made a last-ditch attempt to sway UK voters, promising to reserve sun loungers for Brits, and even recognise Geoff Hurst’s ‘on-the-line’ goal at the 1966 World Cup. To no avail.
(anyway, it was definitely a goal, the Russian linesman said so)(anyway, it was definitely a goal, the Russian linesman said so)
10.06pm BST10.06pm BST
22:0622:06
Merci, guys, I think we’ll need it.....Merci, guys, I think we’ll need it.....
LIBÉRATION: Good Luck #tomorrowspaperstoday #bbcpapers pic.twitter.com/KON9hwq8kzLIBÉRATION: Good Luck #tomorrowspaperstoday #bbcpapers pic.twitter.com/KON9hwq8kz
9.51pm BST9.51pm BST
21:5121:51
Moody’s also warns that Britain’s trade with the rest of the world is probably going to suffer.Moody’s also warns that Britain’s trade with the rest of the world is probably going to suffer.
That’s another reason for downgrading the UK’s outlook to negative tonight.That’s another reason for downgrading the UK’s outlook to negative tonight.
Moody’s says:Moody’s says:
Moody’s expects a negative impact on the economy unless the UK government manages to negotiate a trade deal that largely replicates its current access to the Single Market.Moody’s expects a negative impact on the economy unless the UK government manages to negotiate a trade deal that largely replicates its current access to the Single Market.
However, at the moment there is substantial uncertainty over the type of trade agreement that could be achieved.However, at the moment there is substantial uncertainty over the type of trade agreement that could be achieved.
9.43pm BST9.43pm BST
21:4321:43
Moody's cuts outlook on UK debt to negativeMoody's cuts outlook on UK debt to negative
Breaking news: Moody’s, the credit rating agency, has just lowered the outlook on Britain’s credit rating to negative from stable.Breaking news: Moody’s, the credit rating agency, has just lowered the outlook on Britain’s credit rating to negative from stable.
It says that Britain’s economic growth will be weaker, following the EU referendum vote. It also warns the the public finances will be weaker than previously forecast, meaning it will be harder to cut the deficit.It says that Britain’s economic growth will be weaker, following the EU referendum vote. It also warns the the public finances will be weaker than previously forecast, meaning it will be harder to cut the deficit.
Moody’s says that the Brexit vote will herald a “prolonged period of uncertainty” for the UK, with negative implications for growth in the medium terms.Moody’s says that the Brexit vote will herald a “prolonged period of uncertainty” for the UK, with negative implications for growth in the medium terms.
And it also warns that the effectiveness of economic policymaking could be ‘somewhat diminished’ by the decision.And it also warns that the effectiveness of economic policymaking could be ‘somewhat diminished’ by the decision.
A negative outlook means there is a greater danger of a country being downgraded.A negative outlook means there is a greater danger of a country being downgraded.
BREAKING: Moody's changes outlook on UK sovereign rating to negative from stable, affirms AA1 ratingBREAKING: Moody's changes outlook on UK sovereign rating to negative from stable, affirms AA1 rating
It’s three years since Moody’s cut Britain’s AAA rating. It currently has the UK on AA+, the second highest rating.It’s three years since Moody’s cut Britain’s AAA rating. It currently has the UK on AA+, the second highest rating.
This morning Standard & Poor’s, the only firm that Britain still on triple-A, warned that it is likely to downgrade Britain.This morning Standard & Poor’s, the only firm that Britain still on triple-A, warned that it is likely to downgrade Britain.
UpdatedUpdated
at 9.48pm BSTat 9.48pm BST
9.30pm BST9.30pm BST
21:3021:30
Here’s Dominic Rushe and Sam Thielman’s report on Wall Street’s selloff:Here’s Dominic Rushe and Sam Thielman’s report on Wall Street’s selloff:
Related: UK's out vote proves a ‘game-changer’ for US stocks, oil and goldRelated: UK's out vote proves a ‘game-changer’ for US stocks, oil and gold
UpdatedUpdated
at 9.36pm BSTat 9.36pm BST
9.08pm BST9.08pm BST
21:0821:08
Wall Street suffers biggest fall in 10 monthsWall Street suffers biggest fall in 10 months
DING DING. The closing bell has rung on Wall Street, leaving shares deep in the red.DING DING. The closing bell has rung on Wall Street, leaving shares deep in the red.
The Dow Jones index has slumped by 608 points, or nearly 3.4%, at 17,402. Almost every share lost ground, with financial stocks worst hit.The Dow Jones index has slumped by 608 points, or nearly 3.4%, at 17,402. Almost every share lost ground, with financial stocks worst hit.
Wall Street tumbles most in 10mths after UK #Brexit vote. Dow closes down >600; financials post worst day since 2011 pic.twitter.com/ZDwe00ScawWall Street tumbles most in 10mths after UK #Brexit vote. Dow closes down >600; financials post worst day since 2011 pic.twitter.com/ZDwe00Scaw
The S&P 500, the broadest index of US stocks, tumbled by 76 points or 3.6% to 2,037 points.The S&P 500, the broadest index of US stocks, tumbled by 76 points or 3.6% to 2,037 points.
That’s its biggest one-day fall in 10 months, since global markets were hit by fears ove the Chinese economy in August 2015.That’s its biggest one-day fall in 10 months, since global markets were hit by fears ove the Chinese economy in August 2015.
The Nasdaq has been thumped hard too:The Nasdaq has been thumped hard too:
*NASDAQ COMPOSITE TUMBLES 4.1% IN BIGGEST ROUT SINCE 2011*NASDAQ COMPOSITE TUMBLES 4.1% IN BIGGEST ROUT SINCE 2011
8.58pm BST8.58pm BST
20:5820:58
A wild day in the markets is nearly over....A wild day in the markets is nearly over....
With just minutes until the close, the Dow is down more than 500 points https://t.co/LPXIuZgFYX pic.twitter.com/UIoXTysiP5With just minutes until the close, the Dow is down more than 500 points https://t.co/LPXIuZgFYX pic.twitter.com/UIoXTysiP5
8.56pm BST8.56pm BST
20:5620:56
America’s former top central banker, Alan Greenspan, suggests the City could lose its preeminent place in the world economy:America’s former top central banker, Alan Greenspan, suggests the City could lose its preeminent place in the world economy:
Alan Greenspan tells @BBCNewshour 'serious questions' whether London can remain the financial capital of Europe #BrexitVoteAlan Greenspan tells @BBCNewshour 'serious questions' whether London can remain the financial capital of Europe #BrexitVote
8.53pm BST8.53pm BST
20:5320:53
Trading in the British pound hit unprecented levels today, according to the FT’s Gregory Meyer:Trading in the British pound hit unprecented levels today, according to the FT’s Gregory Meyer:
British pound futures top half a million contracts amid plunge, blowing away previous record of 342,501 pic.twitter.com/1qXOfPoTWWBritish pound futures top half a million contracts amid plunge, blowing away previous record of 342,501 pic.twitter.com/1qXOfPoTWW
8.51pm BST8.51pm BST
20:5120:51
We’re biased, I guess... but this is a great front page.We’re biased, I guess... but this is a great front page.
Tomorrow's @guardian front page — Over. And out | by @ajbreuer https://t.co/zA4SJKJO0y pic.twitter.com/IG3JiHFFyWTomorrow's @guardian front page — Over. And out | by @ajbreuer https://t.co/zA4SJKJO0y pic.twitter.com/IG3JiHFFyW
More to come tonight, of course....More to come tonight, of course....
8.43pm BST8.43pm BST
20:4320:43
The Institute for International Finance have sent some nice charts, showing the slump in world markets today....The Institute for International Finance have sent some nice charts, showing the slump in world markets today....
...and showing how the British pound (GBP) is the worst performing currency today....and showing how the British pound (GBP) is the worst performing currency today.
The IIf says:The IIf says:
The unexpected Brexit win by a solid margin (51.9% to 48.1%) has cascaded across international financial markets.The unexpected Brexit win by a solid margin (51.9% to 48.1%) has cascaded across international financial markets.
The GBP has taken an unprecedented one-day hit, taking it down to levels against the dollar last seen in the mid-1980s. Other risk assets, including the euro, EM currencies, global equities (although less for the US), and most commodities (except for gold) have also fallen sharply amid elevated volatility.The GBP has taken an unprecedented one-day hit, taking it down to levels against the dollar last seen in the mid-1980s. Other risk assets, including the euro, EM currencies, global equities (although less for the US), and most commodities (except for gold) have also fallen sharply amid elevated volatility.
8.33pm BST8.33pm BST
20:3320:33
Sam ThielmanSam Thielman
Financial markets need to get used to a lot more volatility, following Britain’s decision to leave the EU.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: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,”“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.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.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.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.”“[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 BST8.30pm BST
20:3020:30
No surprise what our friends at the Financial Times have splashed on, for tomorrow’s edition: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/q8Z0xB98MsJust published: front page of the Financial Times, US edition, Saturday 25 June pic.twitter.com/q8Z0xB98Ms
8.22pm BST8.22pm BST
20:2220:22
There are some anxious faces on Wall Street today, as shares are hit by the Brexit shock:There are some anxious faces on Wall Street today, as shares are hit by the Brexit shock:
8.16pm BST8.16pm BST
20:1620:16
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.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: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.With Brexit vote, Fed unlikely to raise rates in 2016 on increased financial turmoil, UK in recession, weaker Eurozone & global growth.
8.08pm BST8.08pm BST
20:0820:08
Wall Street foreign exchange analyst Marc Chandler believes the pound will keep sliding in the weeks ahead: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. #FXBBH'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 BST8.01pm BST
20:0120:01
Obama: special relationship will endureObama: special relationship will endure
Barack Obama, president of the United States, has declared that America’s ‘special relationship’ will survive the EU referendum result.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.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: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.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.“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.”“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.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.