UK Votes to leave the UK | Markets drop | Sterling tanks | FTSE 100 -500 already

Support all broken!
Resistance wont be reached!

Good morning. Well, we are leaving then. Market has reacted negatively to that with the FTSE off over 500 points,sterling at its lowest since 1986 and the Dow down 700 already. Today is a good day to let the dust settle and come back Monday, especially after some great trades Wednesday and Thursday – be a shame to give the profit back chasing a bit extra.

US & Asia Overnight from Bloomberg

  • BBC projected victory for campaign to leave European Union
  • WTI, Brent slump more than 6.6%; gold advances above $1,350/oz

Oil posted its biggest intraday loss in more than two months amid a global flight from risky assets as the BBC projected the U.K. voted to leave the European Union.

Futures fell more than 6.6 percent in New York and London. Results from 338 of 382 local counting areas showed that 51.7 percent support leaving the EU and the U.K.’s three main television networks predicted a Brexit win. Haven assets such as gold and the yen surged. While oil will face a wave of risk aversion, the market’s shift from oversupply to balance will overwhelm the currency impact of a leave vote, Societe Generale SA said in report June 21.Oil has fluctuated the past week as uncertainty about the outcome of the U.K. vote drives volatility in global markets. Crude in New York has advanced more than 75 percent from the lowest level in 12 years in February as disruptions from Nigeria to Canada and falling output in the U.S. eased a global surplus.

“If the Brexit vote progresses and spills over into a much bigger global recessionary concern which hurts global demand, that’s probably the biggest risk for oil,” said Angus Nicholson, a markets analyst in Melbourne at IG Ltd. “It’s going to be a very difficult and long process for the U.K. to untangle itself from EU laws and every minor debate holds a major selloff risk.”

West Texas Intermediate for August delivery fell as much as $3.41 to $46.70 a barrel on the New York Mercantile Exchange and was at $47.11 at 12:06 p.m. Hong Kong time. Total volume traded was more than fivefold above the 100-day average.

Brent for August settlement dropped as much as 6.6 percent to $47.54 on the London-based ICE Futures Europe exchange. Prices rose $1.03, or 2.1 percent, to $50.91 on Thursday. The global benchmark crude traded at a premium of 85 cents to WTI.

Treasuries surged, with benchmark yields falling the most in seven years, as a referendum in Britain showed the nation will probably leave the European Union, driving demand for the safest assets.

Financial markets are on a “wild roller coaster,” Mohamed El-Erian, the chief economic adviser at Allianz SE and a Bloomberg View columnist, said in a posting on Twitter. Later he wrote that trading is “getting wilder” and ” more disorderly.” The pound plunged, the yen strengthened and Japanese bond yields fell to a record. The BBC projected the vote to leave the union won the referendum.

“We’ve seen nothing but people trying to buy this market, and panic is palpable,” said John Gorman, the head of U.S. debt trading for Asia and the Pacific at Nomura Holdings Inc. in Tokyo. Nomura is one of the 23 primary dealers that underwrite the U.S. debt.
U.S. 10-year note yields fell 25 basis points to 1.50 percent as of 1:03 p.m. in Tokyo, according to Bloomberg Bond Trader data. The 1.625 percent security due in May 2026 rose 2 1/4, or $22.50 per $1,000 face amount, to 101 1/8. The last time yields dropped more was in March 2009.

The rally adds to the biggest first-half gain for U.S. government securities in six years, driven by demand for safety. The Bloomberg U.S. Treasury Bond Index has returned 3.8 percent so far in 2016, the steepest January-to-June performance since 2010.
Japan’s 10-year bond yield slid to an unprecedented minus 0.215 percent.

Bond manager Bill Gross said preliminary returns in the Brexit referendum are putting free-trade and immigration policies at risk. “Obviously, safe haven bonds instead of equities will benefit,” Gross, manager of the $1.4 billion Janus Global Unconstrained Bond Fund, wrote in an e-mail. [Bloomberg]

FTSE 100 Outlook and Prediction

I’m am going to stay out today as it really could do anything as it digests that news. Will watch the day unfold and pick it up again Monday.

51 Comments

  2. Fair play nick, I’m pleased with last nights trades as made plenty of points just a shame it was on the demo account. bit it all counts as experience. Tmfp what’s your take on today bumpy? Lol

    1. Yeah I’d say that’s likely 😉
      Obviously there will be a range, I’d think 5500/6000 nominally and shrink it down as the morning goes on.
      I don’t know what sort of contingency plan the Support Crew have, treat this like an earthquake, major first shock followed by aftershocks. Stay in the basement for the time being lol.

  4. Morning all, well that’s a surprise. Got short at 6400 as promised, didn’t get any more at 50. Went bed pretty relaxed but thinking I’d chucked away money on the binary. Woke up this morning and short covered at 5800 with long at 5750. Just closed long at 5810. Money made for the year, now I’d better go and dig my real business out of a hole! Happy days

    1. It’s not outside the bounds of possibility true, but many things fall into that category: Alien Invasion, meteor strike, Nigel Farage, 4800, to name a few.

  8. FTSE 250 has recovered 1000 points from the open. I really wish I’d had some spare cash at 8:00 today

  9. I think we are highly vulnerable to another sell off at these levels, probably inspired by a bank/financial institution declaring intent to leave the City.
    It smells a bit of institutional buying which is understandable but ~6100 is getting a bit unreal in the circs.
    Technically no major damage, bearing in mind we were getting daily overbought, nothing hugely broken until we close in mid 5000’s, how about 5400/6400 range?

    Anybody else awake/playing/thinking?

    1. Yup, was about to point out the 50% and so nearly reshorted. Smells all the world like a dead cat to me.
      Luxuriating in my overnight success and off on my Friday chores soon, I’ll stay out till this afternoon now, I think, but a retrace to low 5900’s before then wouldn’t surprise at all.

  12. Can anybody explain to me why today on Germany on my platfrom I see the spread of 8 points, 5 points on FTSE and 4 points on Dow? Will it always be like this now? Spreadex is the platform. What’s going on? 8 points is too much I reckon. It was always 1 point spread during working ours. Please help.

    1. It’s rather special circumstances Jack, the spread betting firms will base their spread on algo models of volatility. The FTSE was 20 pt IG spread earlier.
      NOTHING will be the same again…..

      1. Tell me about it, my other half is devastated.
        Did it happen on other platforms than IG? Will the spread change back to normal 1 points spread at some point or will it always be like this? It’s a bit tough spread for me to trade with in spite of the volatility. I’m not even going near the markets in the near time. I didn’t trade these days pretty much as I had so much stuff going on and I’m not rushing today.

    2. 1623 points Dax fell from the top, 717 points FTSE fell and 843 points Dow fell. Just the historic numbers reminder. 717 points on FTSE it’s gross but Dax utterly amazed.

      1. If you trade Jack it’s very important for you to check out your margin requirement if you trade a smaller account….E.G on city it used to cost approx £35 for one contract……at the moment it’s about £180 for one contract…..it’s gone up from 0.5%….. To 3%…… As a minimum….

        1. Yes, I noticed the margine changes due to higher referendum volatility on the site. But it’s not margin that bothers me, it’s spread.

  13. Things will go back to normal next week, don’t worry.
    The biggest shock is not for the UK, the biggest shock will come to the rest of the Europe gang Merkel/Hollande.

    The UK will have a dip this year but will finally have the freedom
    to anticipate and react to changing world economics.

    This is a special day, where we will see the begging of the end
    of Europe as we know it. Thank god!

    1. Thank you for the update. Hope it will get back to normal. I just wish I sold my shares before the referendum. But I was convinced that it would be remain. It’s like a bad dream now. It’s 4% loss but I hope it will recover.

  16. Wow glad I had to go out, I think I would have sold into this totally authentic rally too early!
    As dietcoke says, 8% discount for cable plus another ~5% off for the dip makes stg denominated equities look very cheap to dollar holders, especially when the bulk of the FTSE has minimal exposure to the UK domestic market.

    LMFAO, you can sell unchanged FTSE close (6338) on IG for actual money! ok 99/1 on but still….
    What a great daily candle!!!
    Even I am speechless, and that takes something 🙂
    Temporarily thought of a LONG AT 6180! Can’t do it…
    Not doing anything more today, but will hold my bit of diff long until the delusions wear off, got a bit of a party tonight.
    5000’s with a vengeance next week.
    GL all, have a great weekend!

    1. A pretty bouncy cat then Si, made of india rubber maybe?
      6180 was ~61.8%. Dead cats rarely get past 50% (6095)which is basically what we got to before the Yanks opened and started bargain buying.
      I’m very tempted to short it around 200 though, but will resist. Hoped you banked some too today.
      Next week should be fun.

      1. Haha, that made me laugh. Out for about 60 just now on my short. Make a killing last night, which has gone some way to making me feel about that lovely 80k loss in Mar/Apr.

          1. I’m off for a power nap/siesta myself before the fun later, just bought myself a Union Jack bowler hat 🙂
            Cheers!

  18. Afternoon all – having said this morning I was done for the year I now find myself with a reasonable FTSE dow difference long, slightly out of money (11392) and small Dow long at 17500. Oh well, off to Gamblers anon!

  19. Congrats to those who made a few quid. I for one have been totally amazed at the events of the last 24 hrs. Loved every minute of it. Can we do it again on Monday. good weekend all.

    1. “Mr Osborne will speak before European markets open at 08:00 and endeavour to avert another stock market sell-off.”

      Phew, that’s ok then, we won’t hit 5600 by 10 o’clock after all. /s

      1. Morning.
        All eyes on the man with a 2/1 in Modern History and no business experience whatsoever

        “No he hasn’t made any decisions at all – he has been totally focused over the last 72 hours on talking to counterparts and investors across the world to try to ensure a period of stability.”

        1. 6050……better be good George.
          A mini short to start the week I think. 100 either way.

  23. Well, what did he say?
    “Let’s do nothing till October.”
    No mention of the £30bn Black Hole, to questions about as penetrating as a straight banana.
    I wonder how that’s going to go down in EuroLand.

  24. I reckon he’s all about keeping his job and showing people he could do the top job. George probably borrowed Cameron’s speech writers now he don’t need them. i think the city will now take control of the ftse and play around with it to suit there needs. Don’t think we are in for high falls but a little bit of manipulation will help the bonuses for this year.

  25. Well, a bit early with that short but at least got the juices flowing. I think I’ll pop it in an anstelbox for the time being.
    Looks fairly orderly trading at the mo, will do a bit off the rsi through the morning.
    Just about recovered from the mother of all parties on Friday which finally ended yesterday lunchtime.

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