US stocks suffer worst two-day slump in 10 months as all major indexes closed down more than 1.5% in wake of Brexit
US markets have suffered the worst two-day slump in 10 months.
Stocks started falling as soon as trading began on the first Monday after the Brexit vote.
By the afternoon, all major indexes were down more than 1.5 per cent.
The Dow Jones Index closed down 260 points. The S&P 500 Index closed down 1.8 per cent.
But it was the Nasdaq that fared the worst, closing down 2.49 per cent, far below the other major indexes, amid fears that Britain’s decision could hit investment spending in the technology sector.
It was a bleak indicator of what is expected to be a turbulent few days in global markets as the world reels following Britain’s vote to leave the European Union.
Tumbling: This was the state of the Dow Jones Index on Monday morning, slumping 148 points at the starting bell at 9.30am Eastern Time, then plummeting another 150 points within two hours a weekend after Brexit
Bleak: The S&P 500 Index was also down on Monday as the world reels after Britain’s vote to leave the EU
The blow to investor confidence and the uncertainty the vote sparked could keep the U.S. Federal Reserve from raising interest rates as planned this year, and even spark a new round of emergency policy easing from major central banks.
The move blindsided investors, who had expected Britain to vote to stay in the EU, and sparked sharp repricing across asset classes.
Mainland European equity markets took the brunt of selling as investors feared the vote could destabilize the 28-member bloc by prompting more referendums.
The turmoil played out despite assurances from George Osborne that global markets could weather the storm.
The British Treasury Secretary made his first remarks about the vote on Monday morning. And although his words were an attempt at calming fears, the pound promptly tumbled to another 31-year low, down $1.3152 against the dollar.
Trading moves on Monday are not yet as extreme as on Friday when stocks fell by their most in almost five years.
But the combined falls on Friday and Monday have broken records in some assets.
U.S. Treasury Secretary Jack Lew insisted on Monday morning that he sees no signs of a financial crisis arising from Brexit.
He did concede, however, that the result does present additional ‘headwinds’ for the U.S. economy.
‘It’s been an orderly impact so far,’ Lew said in an interview on CNBC.
Lew said he expects a transition period as parties work through the ramifications of the June 23 referendum, in which Britons voted by a 52 per cent to 48 per cent margin to withdraw from the EU.
The Nasdaq fell by 1 per cent before briefly picking back up then slumping again
‘Responsible parties will work through this,’ Lew said, adding he expected to see a fairly long period of change and that governments must focus on promoting growth.
The referendum outcome roiled global markets, triggering a $2.08 trillion sell off in global stock markets on Friday, the largest one-day loss in stock market value ever.
U.S. stocks fell by more than 3 per cent, and investors piled into safe assets such as U.S. Treasury securities, driving already meager bond yields lower.
The selling was continuing on Monday morning, with U.S. equity index futures pointing to a decline of about 1 per cent for Wall Street.
Still, Lew said he sees the U.S. economy weathering the situation, even as the referendum result presents ‘an additional headwind.’
‘The U.S. economy is doing pretty well,’ Lew said.
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