Market Update – Brexit
It appears increasingly likely that the UK has elected to leave the EU with over 70% of the vote counted. The pound has come off ~10% against the US$ and UK equity Futures are also pointing down ~10%. The ASX200 has closed down -3.17%.
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).
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.
We will be actively monitoring the market and will seek to be opportunistic over the coming weeks as greater certainty emerges.
Please do not hesitate to contact me should you wish to discuss anything in greater detail.