Worries over Brexit caused US treasury yields to fall to the lowest level ever. At the same time, the yen rose sharply. The slowdown of the Chinese economy is another factor that has affected investor sentiments worldwide.
Yields on Swiss bonds also fell to the lowest ever in the last 50 years. There are rumors that central banks will have to step in again with stimulus plans to counter the slowing economy.
European stocks take a hit
Meanwhile, the FYSE EuroFirst 300 lost 1% of its value in early trade. Commodity inked firms were hit by lackluster Chinese data while the banking sector is under siege due to a 60% plunge in the share prices of Italian banking shares.
The Yen rose almost 1% against the dollar and the Euro while the Sterling fell to its lowest rates in the last 31 years. Hermes Chief Economist Neil Williams says he is sure that Brexit will have global ramifications.
He also said that when a country like China with a $11 trillion economy that imports a big chunk of the world production of commodities slows down, you have to pay attention. People are already nervous about what China has planned for the Yuan. China's central bank recently fixed the yuan/dollar reference rate at a 5 ½ year low.
UK's unicorn service sector slows down
UK's service sector is already starting to slowdown, with growth at a three year low. The Conservative government in the UK will soon hold the first contest to try and determine who will be taking over the reins from David Cameron when he resigns in October.
Markit Chief Economist Chris Williamson said that the uncertainty created by Brexit will probably lead to a further contraction and slowing down of the UK economy. He expects more policy action to take place in the coming weeks.
Chancellor of the Exchequer George Osborne has already said that the government is looking at reducing corporate tax to 15%, to encourage companies to stay in the UK.
Oil prices were another casualty, falling below $50 a barrel on concerns that economic growth will slow down in the wake of Brexit and a weakening Chinese economy. An increase in oil supply from Nigeria and Libya have also contributed to the fall in oil prices.