London open: Stocks reel after UK's shock Brexit vote
Shares reeled at the start of trading, as markets reacted to the 'shock' decision by Britons to withdraw from the European Union, with traders anxious to be better able to gauge what the extent of the fall-out for financial markets and the economy might be.
After 43 years, and in a historic referendum, the UK voted to leave the EU.
As was expected, the Bank of England issued a statement before the start of trading in London saying that it was monitoring developments closely.
In another shock development, the Prime Minister announced he would step down.
Among other things, that appeared to imply that Article 50 of the Lisbon Treaty - starting the two-year countdown to formally finalise the UK's exit - would not be triggered on Friday.
Both Michael Gove and Boris Johnson had asked Cameron not to rush into a decision to trigger Article 50.
As of 0827 BST, the Footsie was 437.16 points or 6.90% lower at 5,900.94, 'outperforming' European stocks by a slight margin.
Holger Schmieding at Berenberg said: "Expect central banks to offer all the liquidity that may be needed to prevent any shortage of liquidity in the financial system, with swap arrangements among each other so that the liquidity can be offered in the currency required. That the European Central Bank is buying sovereign and corporate bonds worth €80bn per month anyway limits the risk of a dramatic blowout in yield spreads as markets ratchet into risk-off mode.
"What we had seen as the most significant risk to the political and economic outlook for the UK and, to a lesser extent, for the European Union as a whole, seems to be materialising."
Over on the Continent, shares were getting walloped, with Germany's Dax down by 8.25% or 809.39 points to 9,447.64 and the Cac-40 off by 9.73% or 434.37 points at 4,034.98.
In parallel, cable was lower by 7.88% at 1.3704 while the US dollar/yen cross was off by 3.31% to 102.65.
Other asset classes were seeing similar moves, with front month Brent crude futures down by 4.5% to $48.74 per barrel on the NYMEX.
Mike van Dulken, head of research at Accendo Markets, said: “Following a one-week rally on hopes that the campaign tide had turned back towards Remain, we expect the hardest hit stocks to be financials (banks, insurance) followed by housebuilders, with commodities related-names (miners, oil) following close behind.”
No FTSE 350 companies released any statements at 0700 BST via the regulatory news service (RNS), though the competition regulator reported on the conclusion of its energy market investigation. The Competition and Markets Authority (CMA) set out what it said were a more than 30 measures "to modernise the market for the benefit of customers" after it found that customers have been paying £1.4bn a year more than they would in a fully competitive market.
In its latest global equity strategy note, Credit Suisse said it would cut its FTSE 100 year-end target by 6% and its Euro Stoxx 50 target by 12% in the event of a Brexit. The Swiss bank said that in a full Brexit scenario – where Article 50 of the Treaty on European Union is invoked almost immediately – its FTSE 100 year-end target would drop to 6,200 from 6,600, while its S&P 500 target would decline to 2,000 from 2,150 and its Euro Stoxx 50 target would slip to 2,950 from 3,350.