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Spreadex Market Update

Friday, June 24, 2016 - Morning Market Update
Connor Campbell - Market Analyst at Spreadex

Post-Brexit bloodbath sees FTSE, pound and their peers in freefall

This early in the day it is hard to provide a particularly nuanced view of what’s going on, especially since the markets are actually struggling to open given the chaotic scenes in trading rooms across the globe. To really capture the extent of the situation it is perhaps easiest to list the current casualties (and there are a lot) dragging the FTSE 7-8% lower.

The housebuilders are among the worst hit; having plunged nearly 40% at the beginning of the session the likes of Berkeley Group and Persimmon have settled back at a still wince-worthy 15% drop. High street staples Next and M&S have fallen over 20%, while Thomas Cook has been the main victim in the travel sector, falling by over 20%. The banking sector is a bloodbath, with 25% dives from Lloyds, RBS and Barclays, almost matched across the continent by Deutsche Bank and Commerzbank.

Of course the pound has been among the most effected; it lost 8% against the dollar (falling all the way back to $1.35 having grazed $1.5 out of hours), with a 5% drop against the euro taking it to €1.23. The Eurozone indices are looking in even worse shape than the FTSE, the DAX and CAC shedding 8% and 10% respectively.

All of this is still in flux, with each stock, currency and index seeing sharp changes in value on a minute to minute basis. There are still some key events to come that will define how the markets look by the end of the day. With an insipid comment from the Bank of England, claiming it will safeguard financial stability, statements from the ECB, and European leaders like Angela Merkel, will continue to set the tone of trading. Even more important will be the actions of David Cameron, with a resignation from the PM likely to cause another round of selling among panicked investors.

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The Trading Day and Week Ahead

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