Sterling’s record plunge, rout of world stocks marks UK’S EU exit

US STOCKS fell sharply on Friday, with the Dow Jones industrial average dropping as much as 538 points, as Britain’s vote to quit the European Union sent a shock wave through global financial markets.

The S&P 500 index and Dow were on track for their biggest one-day percentage drop since September, while the Nasdaq composite index was headed for its worst day since August. All three indexes were set for their second weekly decline in a row.

Global financial markets plunged and sterling sank to its lowest since 1985 after Britons voted by about 52-48 per cent to break away from the world’s biggest trading bloc. “A lot of investors and market participants were not anticipating this outcome,” said David Lefkowitz, senior equity strategist at U.S. Bank Wealth Management Americas in New York.

At 1747 GMT the Dow was down 509.31 points, or 2.83 per cent, at 17,501.76, the S&P was down 63.32 points, or 3 per cent, at 2,050 and the Nasdaq Composite was down 180.39 points, or 3.67 per cent, at 4,729.65.

If the Nasdaq closes down by more than 179.79 points, it would be its biggest one-day points drop since September 2008, at the start of the financial crisis.

Investors worried about the outlook for the world economy sought refuge in the dollar and other traditional safe-harbor assets such as gold and US Treasury bonds, while dumping riskier shares. Banks stocks, which had risen strongly this week in anticipation that Britain would stay in the EU, were among the biggest losers. The financial index fell 4.74 per cent, leading sector decliners, and was set for its worst day in 10 months. Nine of the 10 major S&P 500 sectors were lower.

The CBOE VIX volatility index - known as Wall Street’s fear gauge - was up 35.3 per cent at 23.34 in afternoon trading. The index had earlier surged as much as 52.11 per cent to 26.24, its highest since February.

“We’re going to have to wait out 36 or 72 hours before making a final judgment on what the outcome of the referendum means for the market,” said Art Hogan, chief market strategist at Wunderlich Securities in New York. Britain’s FTSE 100 stock index closed down 3.2 per cent after dropping as much as 8.7 per cent. Asian stocks also tumbled. UK’S big banks took a $100 billion battering, with Lloyds, Barclays and RBS plunging as much as 30 per cent at one point. Sterling sank a staggering 10 per cent at one point and was last down 8 per cent at $1.3667, having carved out a range of $1.3228 to $1.5022. Frankfurt and Paris fell 6 to 8 per cent. Italian, Spanish and European bank stocks also headed for their sharpest one-day drops ever.