Wednesday 28 September 2016

Ratings agency Standard & Poor's strips the UK of its top credit grade in wake of Brexit vote

Published 27/06/2016 | 19:30

Ratings agency S&P slashed the UK’s credit rating by two notches and warned it could cut it further. (AP)
Ratings agency S&P slashed the UK’s credit rating by two notches and warned it could cut it further. (AP)

Stockmarkets plunged again today as the effects of last Thursday’s Brexit vote show to signs of abating.

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Ireland’s ISEQ Overall Index was the worst performer in Europe, plunging nearly 10pc as fallout from the UK’s decision to leave the EU continued to reverberate across the globe.

And this evening, ratings agency S&P slashed the UK’s credit rating by two notches and warned it could cut it further.

The pan-European STOXX 600 fell 4.1pc after suffering a 7pc drop, its biggest one-day fall since 2008, last Friday.

Europe's bank stocks index fell 7.7pc, wiping out more than one-fifth of its value in two days and ending just a handful of points above lows reached at the height of a euro zone debt crisis at the end of 2011.

Analysts said Britain's exit from the EU would likely put more pressure on bank earnings, already stretched by ultra-low interest rates, low growth and a pile of bad debt.

"Brexit is likely to have lasting implications on the outlook for the European banking sector," Deutsche Bank said, recommending clients to avoid banks in Britain and Spain.

Royal Bank of Scotland and Barclays fell 15pc and 17pc respectively, while among other top bank losers were Bank of Ireland, down 21pc, and Intesa Sanpaolo, which fell 11pc.

Shares in Ryanair tumbled 15pc. Easyjet said that a combination of delays at Gatwick, weather, ATC strikes and the Egyptair crash will cut its pre-tax profit in the third quarter by £28m. It also said Brexit will hit it. Its shares fell 23pc.

Aer Lingus owner IAG fell 15.9pc after Goldman Sachs cut its shares to neutral.

The UK’s FTSE-100 fell 2.5pc, while Germany’s DAX index sank 3pc. France’s CAC-40 index also fell 3pc.

Reuters

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