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Brexit upends global markets as stocks, pound plunge, yen soars

London - Global markets buckled as Britain’s vote on European Union membership infected every asset class.

The  pound plunged by a record and the euro slid by the most since it was introduced in 1999 as the BBC projected a victory for the "Leave" campaign with most votes counted in Britain’s referendum on membership of the European Union.

South Africa’s rand led slides among the currencies of commodity-exporting nations as oil sank to about $47 a barrel and industrial metals slumped.

The yen surged and gold soared with US Treasuries as investors piled into haven assets.  Futures on the FTSE 100 Index plunged with S&P 500 Index contracts as Asian stocks dropped by the most in five years.

“It’s scary, and I’ve never seen anything like it,” said James Butterfill, head of research and investments at ETF Securities, said by phone from London. “We’re going to see outflows from basically any kind of cyclical asset. A lot of people were caught out, and many investors will lose a lot of money.”

The debate over the UK’s EU membership has dominated investor sentiment throughout June, with appetite for riskier assets having built up over the past week as bookmakers’ odds suggested the chance of a so-called Brexit was less than one in four.

The victory for the "Leave" campaign will fan speculation that more countries could withdraw from the EU and finance officials in the world’s biggest economies may intervene as reaction in financial markets proves reminiscent of late 2008, at the height of the global financial crisis.

At 5:11 a.m. London time, BBC projections showed voters backing “Leave” by 52% to 48%. UK Prime Minister David Cameron warned Brexit would tip the country into recession, while JPMorgan Chase & Co. and HSBC Holdings warned such as outcome would lead them to move thousands of jobs out of London.

These are among the most notable moves in global financial markets:

British pound falls as much as 11% to $1.3229, weakest since 1985 Yen jumps 4.7% to 101.36 per dollar, after surging past 100 for first time since 2013 Japan’s Topix index leads Asian stock losses, down 7.9% FTSE 100 Index futures tumble 8%; S&P 500 Index contracts slump as much as 5.1%, the maximum move allowed Yield on 10-year Treasuries drops 29 basis points to 1.46%, set for biggest daily decline since 2009; similar Japanese yield reaches record-low minus 0.215 New York crude oil retreats 6.3% to $46.93 a barrel, poised for biggest loss since January 20 Gold rallies as much as 8.1% to $1 358.54 an ounce, highest since March 2014 South Africa’s rand plunged 6.4% against the dollar and reached a record low versus the yen; Mexico’s peso slid 6.1% to 19.33, near its all-time low Poland’s zloty dropped by the most since 1993 The iTraxx Asia index of credit-default swaps rose by the most in three months.

Currencies

The pound was down 9.8% as of 2:15 p.m. in Tokyo, more than double its previous record drop of 4.1% recorded in 1992, when the currency was was forced out of Europe’s exchange-rate mechanism.

“This is a very challenging situation but the reality is that market liquidity and overall liquidity in the U.K. is drying up as we speak in a very rapid way,” said John Woods, chief investment officer for Asia-Pacific at Credit Suisse Private Banking, told Bloomberg TV in Hong Kong.

“It’s highly likely that we see monetary easing in a coordinated response” from central banks across the world, he said.

The euro slumped 3.8%, while currencies in Norway, Sweden and Turkey posted even steeper losses.
Japan’s currency jumped by the most since 1998 versus the dollar.

“All hell is breaking loose,” says Vishnu Varathan, a senior economist in Singapore at Mizuho Bank Ltd. “The only surefire is you buy yen, you buy US Treasuries, you buy gold, and you sit tight."

Stocks

The MSCI Asia Pacific Index declined 4.3% as benchmarks retreated across the region.

British insurer Prudential, HSBC and Standard Chartered all slid more than 10% in Hong Kong. Glencore tumbled 13%.

Commodities

The Bloomberg Commodity Index fell 2.1%, its biggest loss of the year.

Crude oil tumbled as much as 6.8% in New York. Copper and nickel dropped more than 3% in London. Gold was up 5.9%.

"Gold will be a preferred safe-haven asset with a 'Leave' vote," said Barnabas Gan, an economist at Singapore-based Oversea-Chinese Banking Corporation, who forecast that it could rally to as much as $1 400 if 'Remain' loses.

Bullion’s expected to remain volatile until the final verdict is out, according to Gan.

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Rand - Dollar
18.94
-0.1%
Rand - Pound
23.91
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Rand - Euro
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