Brexit Reality Continues to Wreak Havoc on the Markets
British and European stock markets fell again on Monday amid the uncertainty over what the U.K.’s vote to leave the European Union might lead to, AP reported..
Equity markets are in turmoil, and bank shares are getting crushed.
The Brexit decision reportedly wiped $2.1 trillion off market valuations Friday and the British pound slumping to a 31-year low against the dollar.
The FTSE 100 benchmark in London was down about 1 percent at 6,090 while Germany’s DAX was 0.5 percent lower at 9,509.
Some feel the reason the FTSE 100 has not dropped more since Friday, when it closed only 3.2 percent lower, is that many of its listed companies earn money in foreign countries, and the pound’s sharp drop will translate into higher profits when that money is brought back to the U.K. The pound’s drop also makes those shares cheaper for investors outside Britain.
The pound continued to suffer the most losses in the markets, dropping another 1.6 percent against the dollar on Monday, to $1.3462.
Brexit’s direct impact on oil prices is that it might stall the oil market’s delicate re-balancing. It could negatively impact the Oil industry’s fragile gradual recovery as the political risk across the rest of the EU will inevitably rise.
Christine Lagarde, managing director of the International Monetary Fund, said that what happens next depends on how policymakers handle the fallout in the coming days.
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