As feared, Brexit is turning out to be a nightmare for the currency and stock market. Stock and currency markets across the world took a pounding on Friday after news broke that the UK had voted to leave the EU. And it doesn't seem as if the bear run has ended.
On Monday, the pound sterling nosedived, losing almost 2%. The Euro also took a deep hit, as investors opted for the relative safety of gold, the Japanese yen and the low risk government debt. Oil prices were also battered on Friday but recovered after traders realized that the referendum would not affect the global oil market.
When will UK leave the EU? asks the world
Market sentiments remain weak across the world. Some of it can be attributed to the lack of clarity about when the UK will begin the process of leaving the EU. But there are no indications that Britain is going to start that process any time soon.
Nearly half of the UK is still reeling from the shock decision to leave the EU (48 percent voted to remain in the EU). Moreover, David Cameron has said, he will remain in the office until October at least. The pound managed to recover some of its lost sheen after the Chancellor of the Exchequer, George Osborne announced that the Treasury had prepared for this eventuality (the UK leaving the EU) and they were ready to do so as and when required.
How financial markets across the world reacted to the referendum
Wall Street S&P 500 index suffered its worst fall in ten years on Friday but opened in the green on Monday. Financial sector shares saw the sharpest decline on the Hong Kong and Australia share market. As and when Brexit happens, the financial sector will be badly affected, seeing how many of these companies have significant interests in the EU, thanks to the single market.
Japan's benchmark Nikkei closed 2.4% in the green after the Japanese government said that they will intervene in the market if needed, to stabilize the yen. The Japanese economy is considered a safe haven during turbulent times. On the other hand, yields from German bonds fell by 2.4 basis points. There was also a fall in US treasury yields, with market closing at 1.51%. This is a loss of 7 basis points but well above the 1.41% the yield fell to at one point.