I find it interesting to note that all the European bourses were open on Friday, the day following Britain’s historic vote to leave the EU. Britain’s FTSE fared best (relatively speaking) in losing only 3.1%. Spain’s IBEX caved 12.35%, the Italian FTSE (-12%), German DAX (-6.7%) and France’s CAC (-8.0%) all fared far worse than their British counterpart. To some extent, the British FTSE outperformed due to the statement by Bank of England’s governor, Mark Carney, committing significant resources (250 Billion sterling) to stabilize the economy. But that doesn’t entirely explain the beating that took place in competing European markets. Friday’s selloff was one of the largest single session losses for European markets in history. It was also one of the largest single-day losses for the British pound. That trouncing spoke to themes that I outlined in last Thursday morning’s note, a note in which I underscored my caution ahead of the referendum. My full commentary on the historic event Game Changer published on LinkedIn.
UK, the 5th largest economy on the globe, is a member of WTO, G7, G20, World Bank and IMF
China, Korea and Indian markets outperform Japanese markets following the referendum
Negative sovereign debt yields spread through Euroland
Few analysts are focused on the negative consequences of the Out vote for the EU – they are significant
Expect a pivot to Commonwealth countries for trade and closer ties in a reversion to what is old is new again