Thursday 29 September 2016

Brexit: Stocks and sterling slump following Leave victory in Sunderland

* Risk assets retreat as results point to close call on Brexit
* Sterling slumps 4 pct in broad selloff, yen rallies
* Plenty of risks remain, likely limiting longer-run reaction

Wayne Cole

Published 24/06/2016 | 00:39

Leave.eu supporters celebrate the result in Sunderland after polling stations closed in the Referendum on the European Union in London, Britain, June 23, 2016. REUTERS/Toby Melville
Leave.eu supporters celebrate the result in Sunderland after polling stations closed in the Referendum on the European Union in London, Britain, June 23, 2016. REUTERS/Toby Melville
Leave.eu supporters celebrate the result in Sunderland after polling stations closed in the Referendum on the European Union in London, Britain, June 23, 2016. REUTERS/Toby Melville
Leave.eu supporters celebrate the result in Sunderland after polling stations closed in the Referendum on the European Union in London, Britain, June 23, 2016. REUTERS/Toby Melville

Global share markets shed early gains and sterling tumbled in Asia on Friday as early results from the UK's vote on European Union membership proved unnervingly close, sparking a wave of profit-taking across risk assets.

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Sterling collapsed to $1.4475, having earlier stretched to a high for the year at $1.5022. The euro turned tail to hit $1.1324 and the yen recouped early losses to stand at 104.90 per dollar.

Supporters of the Stronger In campaign cheer as the EU referendum result from Gibraltar is announced at London's Royal Festival Hall. Rob Stothard/PA Wire
Supporters of the Stronger In campaign cheer as the EU referendum result from Gibraltar is announced at London's Royal Festival Hall. Rob Stothard/PA Wire

Futures for Japan's Nikkei shed 1.1 percent from its U.S. close, and EMINI futures for the S&P 500 were down 0.4 percent, having climbed 1.76 percent on Thursday.

Financial markets have been racked for months by worries about what Brexit, or a British exit from the European Union, would mean for Europe's stability.

Chuka Umunna, Member of Parliament for Streatham, is interviewed as the Stronger In campaign gather to wait for the result of the EU referendum at London's Royal Festival Hall. Rob Stothard/PA Wire
Chuka Umunna, Member of Parliament for Streatham, is interviewed as the Stronger In campaign gather to wait for the result of the EU referendum at London's Royal Festival Hall. Rob Stothard/PA Wire

Early opinion polls had favoured the "Remain" camp. An Ipsos MORI poll put the lead at 8 points while a YouGov poll found 52 percent of respondents said they voted to remain in the EU while 48 percent voted to leave.

Yet a trickle of official results showed the margins were nail-bitingly tight. Traders were particularly spooked by returns from Sunderland showing a large majority for the "Leave" camp and just a narrow win for "Remain" in Newcastle.

Safe-haven bonds immediately came back into favour, with U.S. 10-year Treasury futures jumping 19 ticks.

Commodities likewise swung lower as a Brexit would be seen as a major threat to global growth. U.S. crude eased 29 cents to $49.83 a barrel in erratic trade.

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