US open: Equity markets slump on Brexit vote

At 1500 BST, the Dow Jones Industrial Average was down 2.2%, the S&P 500 was off 2.3% and the Nasdaq was 2.7% weaker.

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 surged past 100 per US dollar for the first time since November 2013 on its safe-haven appeal.

In Europe, the main indices were sharply lower, but off their worst levels, while the FTSE 100 was weak but outperforming its European peers.

As investors fled to safety, gold, the dollar and US Treasuries all benefited. The pound slid to a 31-year low earlier and at 1500 BST was trading down 8.2% at $1.3786.

Meanwhile the yield on the 10-year US bond hit its lowest level since 2012. Yields move inversely to prices.

In oil markets, West Texas Intermediate dropped 4.3% to $47.94 a barrel while Brent crude lost 4.6% to trade at $48.58.

In terms of sectors, bank stocks took a hit, with Morgan Stanley down 7.8%, Goldman Sachs down 5%, and Bank of America 4.2% weaker.

British Prime Minister David Cameron announced his resignation on Friday, saying the UK needed “fresh leadership” to “steer the country” out of the EU.

The Bank of England was quick to respond to the referendum outcome, saying 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”.

In addition, the European Central Bank pledged to provide additional liquidity, if needed, in euro and foreign currencies.

Bank of America Merrill Lynch said: “Once the dust of the knee-jerk market reaction settles, we think that the UK's economy will clearly be the main victim, but also that the shock for the Euro area and the global economy is likely to be significant. Policy responses will be needed beyond the ‘first-aid’ remedy market disruption normally requires.”

Britain’s vote for Brexit prompted some analysts to re-think their expectations on the timing of the next interest rate hike.

ING pointed out that its view on the timing of the next Fed rate rise had always been contingent on a Remain vote, as financial market stability was one of the three conditions for the US central bank to hike.

“We believe US financial market tightness will increase significantly following the UK’s Leave vote, irrespective of what is happening elsewhere in the US economy.”

The bank said even a December rate hike looks like a long shot now, with any further tightening unlikely until 2017.