Europe open: Stocks and sterling tank, gilts and gold surge on Brexit

European stocks tumbled in early trade, the pound slid against the dollar and oil tanked, while gilts and gold surged as the UK voted to leave the European Union.

Results of the referendum showed a Leave win at 52%, with Remain at 48%. London, Northern Ireland and Scotland backed Remain, while the rest of England and Wales opted to leave.

Markets in Asia crashed on Friday; the Nikkei lost over 8% and the Hang Seng fell more than 4%, while the yen raced past 100 per US dollar for the first time since November 2013 on its safe-haven appeal.

At 0830 BST, the benchmark Stoxx Europe 600 index was down 8.3%, Germany’s DAX was off 7.9% and France’s CAC 40 was 8.8% lower. The FTSE 100 was down 6.2% as it emerged that David Cameron had resigned as prime minister.

He said the UK needed “fresh leadership” to “steer the country” out of the EU.

"There is no need to have a precise timetable today, but in my view we should have a new PM in place in time for the Conservative Party conference in October,” Cameron said.

"A negotiation with the EU will need to begin under a new PM, and I think it's right that this new PM takes the decision about when to invoke Article 50.”

Dennis de Jong, managing director of UFX.com, said: “This is simply unprecedented, the pound has fallen off a cliff and the FTSE is now following suit.

“Britain’s EU referendum has been a cloud hanging over the global economy for the past few months and that cloud has got very dark this morning.

“The markets despise uncertainty, yet that is exactly what they’re faced with this morning. The shockwaves are likely to reverberate for some time and the warning lights are flashing brighter now than ever.”

Unsurprisingly, bank took an absolute battering, with the Stoxx 600 sub-index for the sector down nearly 7%.

In London, Lloyds, Royal Bank of Scotland and Barclays were all down at least 30%. Housebuilders also took a beating, with Taylor Wimpey, Barratt Developments, Berkeley Group and Travis Perkins also suffering losses of 30% or more.

Meanwhile, the pound was trading around $1.3632, having crashed to its lowest level against the dollar since 1985 earlier.

In commodities, oil prices skidded while gold shone as investors looked for safe places to park their cash. West Texas Intermediate was down 5.1% to $47.56 a barrel and Brent crude was 5% weaker at $48.33, and gold surged over 5%.

At the same time, UK gilt yields set new records, with the yield on the benchmark 10-year government bonds down 35 basis points to 1.003%.

Morgan Stanley said on Friday that it expects Brexit to lead to profound and protracted political and economic uncertainty. This in turn will lead to a weaker pound, pushing inflation up and denting growth, the bank said.

“First it will hit sterling, as uncertainty reduces non-residents' appetite for UK assets against the background of the UK's record current account deficit.

“Second, it will hit growth, as firms hold back on investment, and households increase precautionary savings. Longer term, we expect a less open and more volatile economy, with reduced inflows of capital and labour, and a lower rate of potential growth.”

Exane BNP Paribas said European equities could fall 10% to 15% in the next few days, adding that recession by the end of this year was its base case.

The Bank of England said on Friday that it was “monitoring developments closely” and had undertaken "extensive contingency planning and is working closely with HM Treasury, other domestic authorities and overseas central banks”.