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Category: Business, Economics and Finance / Economic Trends / Government and Politics

Share market loses $50b, Australian dollar slumps on Brexit

Friday, 24 Jun 2016 07:53:45 | Thuy Ong

The ASX showing shares being dumped, while volatility soars. (ABC News: David Spicer)

The Australian dollar has tanked and more than $50 billion in shares has been wiped out on the local market after results showed Britain choosing to leave the European Union.

Results were showing a 4 per cent margin for the Leave camp.

External Link: Brexit referendum results

Investors fled in droves after the news, with the ASX 200 extending losses to drop 3.5 per cent to around two-and-a-half-month lows of 5,095 while the All Ords slumped 3.3 per cent to 5,184.

The Australian dollar lost 3.4 per cent to 73.4 US cents.

The market earlier started to sell off when the Leave campaign overtook Remain, indicating high volatility as investors face uncertainty.

Every sector on the local market was in the red, except for gold companies as investors eyed the safe haven metal.

All the big four banks sank by more than 2 per cent, while blue chip miners BHP Billiton and Rio Tinto slumped 4.6 per cent and 3.8 per cent respectively.

Gold miners Newcrest Mining and Regis Resources gained 3.7 per cent and 4.6 per cent respectively as gold jumped 8 per cent.

Asian markets also tumbled as they opened for trade, with China's Shanghai Composite dumping 1.2 per cent to 2,857.6, while in Japan, the Nikkei briefly halted after dumping 7.6 per cent to 15,007.3.

Asian currencies suffered on worries investors would pull funds from emerging markets.

British pound slumps to lowest level since 1985

The British pound slumped over after a Leave result in the Sunderland electorate came in stronger than expected, extending falls as the BBC forecast a win for Leave.

The pound shed more than 10 per cent of its value to $US1.346 — its lowest level since 1985 — before recouping some losses.

Traders experienced one of the busiest 30-minute periods between 9:00 and 9:30 pm British standard time.

"Currency market reaction to the Leave win in Sunderland demonstrates that markets are now vulnerable to selling, and liquidity could be thin," said Ric Spooner, chief market analyst at CMC Markets in a note to clients.

Bloomberg graph GBP Photo: Bloomberg price chart showing the pound's decline as votes are counted.

Futures trade points to more carnage

Futures trading indicated more carnage to follow when the London stock exchange and Wall Street open later in the global day.

The EMINI S&P 500 Futures lost 5 per cent, while the Dow Jones Index Futures was down 4 per cent.

In London, the FTSE 100 is expected to slump when it opens, with FTSE futures indicating a loss of 8.8 per cent or 555 points.

"The carnage in the FX markets may continue if the Leave votes pull further ahead," Bernard Aw, markets strategist at IG in Singapore, told Reuters.

"Equities markets will be affected, and we can see that Asian stocks are already under a fair bit of pressure.

"British banks listed in Hong Kong are suffering significant losses."

ABC/Reuters

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