Summary

Markets around the world are embroiled in volatility as the reality of a Brexit sinks in. The final results from yesterday’s vote put the ‘Leave’ camp ahead of ‘Remain by 52% to 48%.

Here’s a snapshot of a dismal morning trading session:

• The Dow is down around 460 points.
• The pound sterling is down 8.5% to 1.36 to the USD.
• Japan’s Nikkei stock exchange was down 8% overnight as a global flight to safety inflated the value of the yen.
• Germany’s DAX is down around 6%.
• France’s CAC is down around 7%.
• The UK’s FTSE is down around 2.5%.
• Gold is up around 4%.
• Oil is down around 4%.

Impact

The Brexit is an unprecedented event that will reverberate economically and politically for years, even decades to come. The most immediate effects are as follows:

David Cameron is finished. The UK Prime Minister has announced that he will step down before October, conceding that the Remain cause he championed had failed and saying that “fresh leadership” was needed to guide the country in the days ahead. The leading candidate to replace him is Boris Johnson, former mayor of London and face of the Leave campaign.

Uncertainty Reins.  Market volatility will be the rule over the short-term. Nothing like this has ever happened before – no country has ever triggered Article 50 of the Lisbon Treaty – and as such, to a certain degree, volatility will loom until the exit process has been completed. Of course, there are things that can happen in the interim that will mitigate against this: a clear timetable for the UK’s exit and a clarification of what the trade relationship between the UK and EU would be post-Brexit.