EU Referendum: Market Shock Waves as Results Point to Brexit
George Parker and Michael Mackenzie
Financial Times
Workers begin counting ballots after polling stations closed in the Referendum on the European Union in Glasgow, Scotland, Britain, June 23, 2016. REUTERS/Clodagh Kilcoyne©Reuters
Britain appeared on the brink of voting to leave the EU on Friday morning after scores of referendum results pointed to Brexit, pushing sterling to a 30-year low and sending shockwaves through global markets.
The pound set a record intraday swing of more than 10 per cent between its high and low points, while FTSE 100 futures slumped 8 per cent amid seismic reverberations in markets.
Barometers of risk aversion for investors soared in value with gold rising above $1,300 an ounce while the 10-year US Treasury yield fell towards 1.50 per cent, the lowest level since 2012. US stock-index futures fell more than 3.5 per cent.
Meanwhile, the Yen briefly broke through the 100 yen barrier to the dollar, before rebounding as traders are wary of intervention by the Bank of Japan to prevent further currency appreciation.
At 4am, with results in from more than 240 of the 382 voting areas, Leave was ahead by 51-49 per cent, with many Remain strongholds already declared. Nigel Farage, UK Independence party leader, said: “Let June 23 go down in history as independence day.”
Scotland and London were voting heavily for Remain, but across rural England and in many towns, a revolt against Britain’s elite was under way.
Prime minister David Cameron led a cross-party coalition for Remain, backed by Britain’s biggest companies, leading economists and trade union leaders, but swaths of the country simply ignored the warnings of the economic danger of Brexit.
Just over a week ago, the pound approached $1.40 to the dollar and then surged, peaking at $1.5018 as polls were released soon after voting ended, suggesting a Remain victory.
During the post-Bretton Woods era of floating currencies, the pound has rarely spent time below $1.40 aside from the mid-1980s era of extreme US dollar strength.
The pound had surged after Mr Farage appeared to concede defeat at 10pm as polls closed: “It looks like Remain will edge it.”
But as the first results came in there was a dramatic shift in political and market opinion, with Leave outperforming expectations, as Labour voters turned out in large numbers to reject the status quo.
Newcastle upon Tyne, which had been expected to be solidly for Remain, backed Britain’s continued EU membership by a margin of only 51-49. In nearby Sunderland, a traditional working-class city in the north-east there was a resounding 61-39 majority.
London, Liverpool and Glasgow voted strongly for Remain, but in countless rural councils and towns across England — including many traditional Labour areas — there were strong votes for Leave. Sheffield, Nottingham and Coventry were among the cities voting for Brexit.
David Cameron, who earlier in the evening had been considering how to restore Tory party unity after a referendum victory, was suddenly facing the possibility of defeat. However, some of the biggest areas of the UK, including many London boroughs and Birmingham had yet to declare.
The early indications rattled global markets. Japan’s yen, a barometer of risk aversion, surged 3.2 per cent against sterling as traders’ early optimism of a Remain outcome was shaken. The 10-year US Treasury yield was down 21 bps at 1.53 per cent. Gold rose above $1300 an ounce.
The results sent jitters through the Remain camp, which pinned its hopes on very high levels of support in London — an indication of the way in which the referendum has divided the country.
Marcus Roberts of YouGov said: “The gap between the metropolitan, cosmopolitan, middle class voters and working class social conservatives has now grown so great that it simply cannot be ignored.”
Andy Burnham, Labour’s home affairs spokesman, said his party’s voters were angry. “The political class has not been listening to their concerns about immigration,” he said.
As polls closed at 10pm on Thursday, many of the Conservative MPs who campaigned against Mr Cameron in the referendum handed a letter to Downing Street expressing support for the prime minister to remain in his job, whatever the outcome.
That move looked set to damp any early challenge to his leadership, but some have predicted that Mr Cameron would resign if Britain ignored his advice and voted for Brexit.
Among the 86 MPs who signed the letter were former London mayor Boris Johnson, Leader of the House Chris Grayling, and justice secretary Michael Gove.
Vote Leave, the official campaign advocating a British exit from the EU, had sent an email to supporters on Thursday citing high turnout in Scotland and London and urging its voters to head to the polls before they closed at 10pm.
The capital, hit by severe bad weather on Thursday, and Scotland are both regarded as Remain strongholds, in contrast to swaths of the Midlands and northern England, where weather was clear throughout the day.
The first results from 382 different polling areas began arriving soon after midnight — the first from Gibraltar.
This is only the third UK-wide referendum. The other two both produced a vote for the status quo: in 1975 Britain decided to stay in the EU and in 2011 it opted to stick with its first-past-the-post system of electing MPs.
Financial Times
Workers begin counting ballots after polling stations closed in the Referendum on the European Union in Glasgow, Scotland, Britain, June 23, 2016. REUTERS/Clodagh Kilcoyne©Reuters
Britain appeared on the brink of voting to leave the EU on Friday morning after scores of referendum results pointed to Brexit, pushing sterling to a 30-year low and sending shockwaves through global markets.
The pound set a record intraday swing of more than 10 per cent between its high and low points, while FTSE 100 futures slumped 8 per cent amid seismic reverberations in markets.
Barometers of risk aversion for investors soared in value with gold rising above $1,300 an ounce while the 10-year US Treasury yield fell towards 1.50 per cent, the lowest level since 2012. US stock-index futures fell more than 3.5 per cent.
Meanwhile, the Yen briefly broke through the 100 yen barrier to the dollar, before rebounding as traders are wary of intervention by the Bank of Japan to prevent further currency appreciation.
At 4am, with results in from more than 240 of the 382 voting areas, Leave was ahead by 51-49 per cent, with many Remain strongholds already declared. Nigel Farage, UK Independence party leader, said: “Let June 23 go down in history as independence day.”
Scotland and London were voting heavily for Remain, but across rural England and in many towns, a revolt against Britain’s elite was under way.
Prime minister David Cameron led a cross-party coalition for Remain, backed by Britain’s biggest companies, leading economists and trade union leaders, but swaths of the country simply ignored the warnings of the economic danger of Brexit.
Just over a week ago, the pound approached $1.40 to the dollar and then surged, peaking at $1.5018 as polls were released soon after voting ended, suggesting a Remain victory.
During the post-Bretton Woods era of floating currencies, the pound has rarely spent time below $1.40 aside from the mid-1980s era of extreme US dollar strength.
The pound had surged after Mr Farage appeared to concede defeat at 10pm as polls closed: “It looks like Remain will edge it.”
But as the first results came in there was a dramatic shift in political and market opinion, with Leave outperforming expectations, as Labour voters turned out in large numbers to reject the status quo.
Newcastle upon Tyne, which had been expected to be solidly for Remain, backed Britain’s continued EU membership by a margin of only 51-49. In nearby Sunderland, a traditional working-class city in the north-east there was a resounding 61-39 majority.
London, Liverpool and Glasgow voted strongly for Remain, but in countless rural councils and towns across England — including many traditional Labour areas — there were strong votes for Leave. Sheffield, Nottingham and Coventry were among the cities voting for Brexit.
David Cameron, who earlier in the evening had been considering how to restore Tory party unity after a referendum victory, was suddenly facing the possibility of defeat. However, some of the biggest areas of the UK, including many London boroughs and Birmingham had yet to declare.
The early indications rattled global markets. Japan’s yen, a barometer of risk aversion, surged 3.2 per cent against sterling as traders’ early optimism of a Remain outcome was shaken. The 10-year US Treasury yield was down 21 bps at 1.53 per cent. Gold rose above $1300 an ounce.
The results sent jitters through the Remain camp, which pinned its hopes on very high levels of support in London — an indication of the way in which the referendum has divided the country.
Marcus Roberts of YouGov said: “The gap between the metropolitan, cosmopolitan, middle class voters and working class social conservatives has now grown so great that it simply cannot be ignored.”
Andy Burnham, Labour’s home affairs spokesman, said his party’s voters were angry. “The political class has not been listening to their concerns about immigration,” he said.
As polls closed at 10pm on Thursday, many of the Conservative MPs who campaigned against Mr Cameron in the referendum handed a letter to Downing Street expressing support for the prime minister to remain in his job, whatever the outcome.
That move looked set to damp any early challenge to his leadership, but some have predicted that Mr Cameron would resign if Britain ignored his advice and voted for Brexit.
Among the 86 MPs who signed the letter were former London mayor Boris Johnson, Leader of the House Chris Grayling, and justice secretary Michael Gove.
Vote Leave, the official campaign advocating a British exit from the EU, had sent an email to supporters on Thursday citing high turnout in Scotland and London and urging its voters to head to the polls before they closed at 10pm.
The capital, hit by severe bad weather on Thursday, and Scotland are both regarded as Remain strongholds, in contrast to swaths of the Midlands and northern England, where weather was clear throughout the day.
The first results from 382 different polling areas began arriving soon after midnight — the first from Gibraltar.
This is only the third UK-wide referendum. The other two both produced a vote for the status quo: in 1975 Britain decided to stay in the EU and in 2011 it opted to stick with its first-past-the-post system of electing MPs.
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