25 October 2016

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Bank shares slide as Brexit turmoil hits world stocks

World stocks tumbled and European bank shares were on track for their biggest ever two-day fall on Monday as the political and economic fallout of Britain's shock vote to leave the European Union drove sterling to a fresh 31-year low against the dollar, Reuters reported.


Faced with a second day of turmoil after Thursday's referendum, which most in markets had thought would deliver a vote in favor of staying in the EU, investors sought safe havens such as the yen, gold and core government debt, Reuters wrote.

British finance minister George Osborne sought to reassure markets, saying the world's fifth-largest economy was strong enough to cope with the Brexit-inspired volatility, but the positive impact on sterling was only fleeting, as noted in the report.

"This Brexit decision has taken the markets by total surprise. I would remain on the sidelines - no reason to step in yet," said Hampstead Capital hedge fund manager Lex Van Dam.

An index of European bank shares fell 7.3%, taking losses in the last two trading days to around 20%. Royal Bank of Scotland shares fell 24% while Barclays shed 18%, Reuters wrote.

Italian banks also suffered. The government was looking at options to help its banks and prevent further share price falls.

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