Market Update & Important Indicators
Britain's surprise vote to leave the European Union sent U.S. stocks tumbling Friday as the world's financial markets braced for an uncertain future for the politics and economies of Europe. The Dow Jones Industrial Average dropped 611.21 points, or 3.4%, to 17399.86, wiping out its year-to-date gains. The S&P 500 index fell 3.6%, dragged lower by bank stocks, and the tech-heavy Nasdaq Composite shed 4.1%.
European stocks posted their worst daily drop in nearly eight years Friday, after investors dumped risk assets following the U.K.'s historic referendum that left the country on course to leave the European Union. The Stoxx Europe 600 tumbled 7% to 321.98, marking its worst session since October 2008 in the fallout of Lehman Brothers' bankruptcy, according to FactSet data. The stock gauge had been on pace for its largest daily drop since October 1987, but pared losses. The pan-European benchmark closed down 1.2% for the week, marking its fourth-straight weekly drop. In London, the FTSE 100 slid 3.2% to 6,138.69, bouncing back from steeper early losses. Germany's DAX 30 was knocked down 6.8% to 9,557.16, and France's CAC 40 tumbled 8% to 4,106.73. Spain's IBEX 35 fell 12.4% to 7,787.70, and Italy's FTSE MIB lost 12.5% to 15,723.81.
Britain's vote to leave the European Union sent reverberations through to Asian markets on Friday, where investors were the first to react as it became clear a shock result was in the offing. Japanese shares led a slump in regional stock markets. The Nikkei Stock Average closed down 7.9%, its steepest one-day loss for five years. While the U.K. isn't a huge export market for most Asian countries, several companies in the region have made heavy investments there. In Japan, industrial conglomerate Hitachi dropped 10.3%, while advertising agency Dentsu slumped by 12.5% and auto maker Nissan Motor fell 8.1%. Hong Kong-listed shares in British banks HSBC and Standard Chartered dropped by 6.6% and 9.5%, respectively, leading the Hang Seng Index down 2.9%.
Billions of dollars were wiped off Australia's share market on a torrid day for investors who had positioned themselves for the U.K. staying in the European Union, and then got caught on the wrong side of the trade. The S&P/ASX 200 closed down 3.2%, or 167.5 points, at 5113.2 on Friday – its biggest one-day loss since Sept. 29, 2015. Australia's currency also fell sharply against the U.S. dollar, as traders speculated that the uncertainty triggered by the "Brexit" vote in the U.K. could prompt the Reserve Bank of Australia to cut interest rates soon.
Copper futures closed lower in London Friday, as risk-averse investors redirected their money into safe havens after the U.K. voted to leave the European Union in an historic referendum. The London Metal Exchange's three-month copper contract was down 1.7% at $4,698 a ton at the end of open-outcry trading, having hit a four-day low earlier in the session at $4,588 a ton. Among the other base metals, aluminium closed down 1.5% at $1,608 a ton, zinc was down 1% at $2,016 a ton, nickel was down 2.2% at $8,973 a ton, and lead was down 1.2% at 1,705 a ton.
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