European stocks plummeted, heading toward the biggest drop since 1987, after the UK voted to leave the European Union, putting an end to investor optimism that had pushed equities up this week. The ESTX 50 (-8.36%), CAC 40 (-8.10%), Dax (-6.52%) and the UK markets (-4.25%) all posted big losses in early trading. 52% of UK voters opted to leave the EU. In a secession scenario, the UK will have two years to negotiate its EU exit, the first ever from the bloc. UK housebuilders Taylor Wimpey Plc and Persimmon Plc plummeted -20% or more. EasyJet Plc, a company that gets about half its revenue from European markets excluding the UK, tumbled -16%. Julius Baer Group Ltd dropped -8.9% after saying market turbulence triggered by Brexit could temporarily hit gross margins at wealth management firms.
US stocks finished higher as investors bet that UK voters would elect to remain in the European Union in a long anticipated referendum. The Dow Jones Industrial Average (+1.29%), S&P 500 (+1.34%) and Nasdaq Composite (+1.59%) all advanced. Financial markets have followed the referendum closely. Risk assets such as stocks and oil have typically gained when polls suggested Britain would stay in the EU, while haven assets have been favoured as polls tilted toward exit. Goldman Sachs (+3.05%), Caterpillar (+2.34%), Citigroup (+4.2%) and Bank of America (+3.2%) posted the largest gains. Chevron added +2.1% and ConocoPhillips added +1.64% as Brent crude rose +2.1%. Macy’s rose +1.7% after saying its longtime CEO Terry Lundgren, will step down.
Asian stocks dropped, with Japanese shares suffering their worst day in five years as results from the UK’s referendum on its European Union membership showed the country had voted to leave. The S&P/ASX 200 (-3.17%), Hang Seng (-2.92%) and the Nikkei 225 (-7.92%) all tumbled. Japanese companies seen as highly exposed to the UK economy fell particularly hard. Hitachi was down -10%, Dentsu dropped -8.9% and Nissan Motor fell -8.5%. In Hong Kong, companies with exposure to the UK such as major banks Standard Chartered Plc (-9.72%) and HSBC Holdings Plc (-6.59%) were heavily hit.
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