The citizens of the UK have elected to leave the E. The pound has come off ~10% against the US$ and UK equity Futures are also pointing down ~10%. At this point in time the ASX200 is currently down -3%.
The UK’s decision to leave the EU is a surprise for the market which has seen increased volatility over the course of the day as polling and voting results were revealed in what has been a tight contest.
Implications for the ‘leave’ vote include new trade agreements between the UK and EU which need to be negotiated, a potential 2nd Scottish referendum on independence and potential for further exits from the EU (eg. Denmark, Sweden), however it is likely that this will take time to be resolved (perhaps years). The most recent implication is the resignation of Prime Minister, David Cameron who is expected to be replaced by October 2016.
In the meantime, volatility is expected to continue in the short term. Stocks hit the hardest include those exposed to the UK on currency concerns, Financials on potential credit implications and Resources on global growth uncertainty.
Please find a link below to a presentation by Fidelity on Brexit and what this will mean for markets.
If you have any concerns in relation to this matter, please contact your WealthPartners Adviser