Britain’s shock vote to pull out of the European Union wiped $2.1 trillion from global equity markets Friday as traders panicked in the face of a new threat to the global economy.
Investors fled to the safety of gold, the yen and blue-chip bonds as the seismic shift in the structure of Europe left many huge questions hanging, including who will lead Britain following the resignation of Prime Minister David Cameron.
The Brexit vote sparked eight per cent losses in the Tokyo and Paris bourses, nearly seven per cent in Frankfurt and more than three per cent in London and New York.
Central banks stepped in to bolster confidence, promising to inject liquidity where needed and appearing to mitigate some of the sharpest losses.
Still, the pound crashed 10 per cent to a 31-year low at one point, before rebounding slightly for a 9.1 per cent loss against the greenback in late trade. The euro also plummeted, dropping 2.6 per cent on the dollar.
Benefitting from a massive safety selloff, gold jumped nearly five percent and the yen surged 4.2 per cent against the dollar and 7 per cent on the euro. The dollar at one point fell below 100 yen for the first time since November 2013.
US 10-year treasury bond yields hit their lowest since 2012 at 1.42 per cent before edging higher, while the German 10-year bond fell into negative territory for the second time in history.
