"It’s Scary, And I’ve Never Seen Anything Like It" - Where Markets Are The Morning After

Tyler Durden's picture

For those of you who are just waking up, first of all, congratulations. Here is what you missed.

European, Asian stocks and S&P futures plummet, as U.K. votes to leave European Union membership. FX carry trades everywhere go haywire, with the Dollar and Yen spiking while the Cable overnight plunged to 30 year lows and at last check was trading just around 1.37, down 1,300 pips from yesterday's highs. A modest rebound was experienced when first the Bank of England and shortly after all other central banks promised to pump virtually unlimited liquidity into the financial system. Ironically, all of this takes place a day after Fed’s stress tests showing all 33 banks exceed minimum requirements  - we may find out just how "unstressed" they are as soon as today.

For those who are pressed for time, the following quote from James Butterfill, head of research and investments at ETF Securities, summarized it best: "It’s scary, and I’ve never seen anything like it. We’re going to see outflows from basically any kind of cyclical asset. A lot of people were caught out, and many investors will lose a lot of money.”

Here are key market updates:

  • S&P 500 futures down 3.9% to 2023
  • Stoxx 600 down 7% to 322
  • MSCI Asia Pacific down 4.1% to 125
  • US 10-yr yield down 22bps to 1.53%
  • Dollar Index up 1.86% to 95.27
  • WTI Crude futures down 4.2% to $48.00
  • Brent Futures down 4.3% to $48.70
  • Gold spot up 4.2% to $1,310
  • Silver spot up 2.8% to $17.77

TOP NEWS:

  • U.K. Votes for Brexit as Cameron Resigns After Historic Rupture: Prime minister to step down as Johnson weighs next step
  • Pound Plunges to 30-Year Low as U.K. Assets Slide on Brexit: ‘There are certain days you never forget,’ says HSBC’s Bloom
  • Carney Pledges $345 Billion to Fund First Line of Brexit Defense: Markets bets on a July interest rate cut climb to 50%
  • Nationalist Parties Seize on Brexit to Demand Own EU Referendums: Le Pen, Wilders, Northern League call for vote
  • Biggest U.S. Banks Seen Weathering Severe Stress in Fed Test: Regulators release results of Dodd-Frank mandated exercise
  • Oil Tumbles After Brexit Vote as Traders Assess Lasting Impact: WTI, Brent down >6.6% as traders flee risky assets
  • Gold Sees Biggest Gain Since 2008 in Rush for Havens From Brexit: Sterling-denominated gold jumps 15%, the most ever
  • Xerox Appoints Jeff Jacobson as New Chief After Co. Split: Jacobson named as incoming CEO of document technology seller
  • Albemarle, Fortive to Join S&P 500; Emcor Named to MidCap 400: Changes to be implemented after close of trading June 30

WHAT HAPPENED IN EUROPEAN MARKETS:

European shares sinks after U.K. voted to quit the European Union. All 19 Stoxx 600 sectors fall with banks, insurance underperforming and health care, food & beverage outperforming. 90% of Stoxx 600 members decline, 10% gain. “It’s scary, and I’ve never seen anything like it,” said James Butterfill, head of research and investments at ETF Securities, said by phone from London. “We’re going to see outflows from basically any kind of cyclical asset. A lot of people were caught out, and many investors will lose a lot of money.”

As the win for the Leave campaign in the EU referendum became clear, global equities plunged with the FTSE 100 falling as low as 8%, led by sharp losses in financials with UK banks (Barclays, Lloyds, RBS) lower by around 30% which has seen the iTraxx senior financials 5yr index (CDS on banks) soar to its highest level since February. As such, the fear of contagion from this outcome has seen European bourses heavily in the red (DAX -10%, Euro Stoxx -9%), while the E-mini S&P 500 saw a 5% fall to hit limit down.

However, in recent trade, equities have pulled off worst levels as markets find relative calm amid the BoE Governor stating that the central bank is willing to provide liquidity in the form of GBP 250b1n, while David Cameron announced that he will remain as PM till October in order to combat any immediate instability. Elsewhere, Gilt yields have seen its largest drop since 2009 to yet again print fresh record lows as investors flock to safe haven assets, while Bunds staggeringly opened slightly below 169.00 before paring somewhat, back to around 166.00. Of note, in the wake of the Brexit outcome, S&P have warned that the UK could lose its AAA sovereign rating, while the likes of Goldman Sachs, JP Morgan and ING have all forecast an upcoming BoE rate cut.

EUROPEAN DATA:

  • Stoxx 600 down 7% to 322
  • FTSE 100 down 5.3% to 6003
  • DAX down 6.6% to 9579
  • German 10Yr yield down 17bps to -0.08%
  • Italian 10Yr yield up 11bps to 1.51%
  • Spanish 10Yr yield up 11bps to 1.58%
  • S&P GSCI Index down 2.7% to 370.3

EUROPEAN TOP NEWS:

  • Finance Chiefs Dismay Brexit as Bank Stocks Plunge Across Europe: Deutsche Bank CEO calls decision “negative on all sides”
  • SNB Steps Into Currency Market Amid Brexit-Induced Stress: Swiss policy makers have repeatedly threatened interventions
  • German Ifo Confidence Improved Even as Brexit Threat Loomed: Ifo business climate index rises to 108.7 from 107.8
  • Deutsche Boerse Reaffirms Plan to Buy LSE After Brexit Vote: LSE equity holders to own 45.8% of the enlarged company
  • S&P Prepares U.K. Ratings Downgrade as Britain Votes to Leave EU: S&P sees period of uncertainty that may prevail for years
  • Henkel to Buy Sun Products for $3.6 Billion in Biggest U.S. Deal: Deal gives company No. 2 position in U.S. laundry care
  • Rexel Fires CEO Provoost After Disagreement on Governance: Company veteran Patrick Berard named CEO as of July 1
  • Air France-KLM Names Janaillac CEO and Chairman as of July 4: Janaillac to become chairman and CEO from July 4
  • EDF CEO Says Strategy in U.K. Won’t Be Affected by Brexit Vote: Vote has no impact on co.’s strategy, Levy says
  • IAG Sees Brexit Volatility Reducing Profit Growth This Year: No longer sees absolute op. profit increase in FY like ’15

WHAT HAPPENED IN ASIAN MARKETS:

Asian stocks slumps, heading for the steepest drop in 10 months. All 10 sectors drop in the MSCI Asia Pacific Index with materials, consumer discretionary underperforming and utilities, information technology outperforming. Yen briefly surged past 100 as Brexit in Lead in Results. “Fear is normally easier to profit from than greed. This is what we are seeing today,” said Ang Kok Heng, Kuala Lumpur-based chief investment officer at Phillip Capital Management Bhd., which oversees $630 million in Kuala Lumpur.

BoJ Governor Kuroda said he is ready to supply sufficient liquidity and to carefully watch effects on markets.

Risk assets tumbled overnight as the UK vote to leave the EU, which saw FTSE 100 futures briefly decline below the 5800. This also saw losses of around 200 points to the E-mini S&P and crashed Asian equity markets with Nikkei 225 declining as much as 8%, with Osaka futures triggering circuit breakers. Elsewhere, Shanghai Comp and Hang Seng conformed to the global sell-off with UK dual-listed financials including HSBC, Prudential and Standard Chartered under heavy pressure in Hong Kong taking on a likely Brexit. Finally, 10yr JGBs outperformed while T-notes rose around 2.5 points as the Brexit woes spur heavy flows into safer assets which also pushed gold higher by USD 80/oz. Japanese Finance Minister Aso pledged to take measures to calm markets and added that a Brexit will not have a sudden impact on the Japanese real economy.

ASIA DATA:

  • MSCI Asia Pacific down 4.1% to 125
  • Nikkei 225 down 7.9% to 14952
  • Hang Seng down 2.9% to 20259
  • Shanghai Composite down 1.3% to 2854
  • S&P/ASX 200 down 3.2% to 5113

ASIA TOP NEWS:

  • Yen Soars Past 100 Per Dollar as U.K. Vote Spurs Rush to Safety: Currency surges 18% versus pound as Britons choose Brexit
  • Offshore Yuan Drops Most in Five Months as Brexit Victory Looms: PBOC injects most funds this week since April via operations
  • HSBC, Standard Chartered Lead Asia Bank Rout as U.K. Votes ‘Out’: Banks have warned of U.K. job cuts in case of Brexit
  • Brexit Brings Short-Lived Pain for India’s Largest IT Exporters: Cos. may benefit from increased demand in long term
  • Hong Kong’s China Tourist Malaise Deepens From Bling to Buns: Sa Sa profit plunge 54% on poorer cosmetic sales to Chinese

In FX, the aftermath of the UK vote to leave the EU has seen Cable plummeting from its highs, which managed to print a 1.5000 handle before the news starting hitting the wires from the first regions reported. The sell-off led to the key spot rate recording lows around 1.3230, but the fallout has since been tempered, with what is an impressive recovery to within 30 ticks or so of the 1.4000 mark before moving back towards 1.3700. EUR/GBP highs tipped .8300, but London has since seen the cross rate dipping under .8000, but it is all early days as yet. Gains in the JPY and CHF have been notable also, but both the BoJ and SNB will have intervened to some degree — the SNB confirming as much after EUR/CHF well into to the low 1.0600's. USD/JPY took out 100.00 to print lows ahead of 99.00, but the recovery here —alongside some moderation in equities — has seen the 103.00 attained, but struggling to maintain a foothold here —understandable in the current climate. AUD, NZD and CAD have all lost out, but have been fighting back since —AUD in particular now only 2.5 cents off the overnight highs.

In commodities, heading into the North American crossover, WTI and Brent crude futures remain pressured on the back of the strength in the greenback, as such prices hover below USD 48 and USD 49 respectively. In terms of specific newsflow it has been somewhat muted given the focus revolving around the UK referendum. Separately, gold prices outperformed with participants flocking to safe-haven assets with the precious metal reaching highs of near USD 1360/oz in light of the EU referendum result, before paring some of the moves to head into the North American open around USD 1318/oz.

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Last of the Middle Class's picture

I think they call it "totally uncontrolled". It's a thing markets do every once in a while.

Haus-Targaryen's picture

If they think this is scary, wait until we get hit with a currency crisis.  THAT will be scary.  This is nothing.  

bamawatson's picture

this is scary 

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Muddy1's picture

Hopefully Brits willfollow through by electing Nigel Farage as the new Prime Minister.

lakecity55's picture

Putin for SECDEF!

Bernie for SoS.

rccalhoun's picture

the 10 year is still at 1.52%...still a lot of compressing to do to the yield curve and multiples until we get near negative.

 

DownWithYogaPants's picture

Trump showed how keen his "spider sense" on yet another issue.  In this case he traveled to the UK shortly before the vote.   

 

Who do you want to be the next president?  Spiderman?  Or the Wicked Witch of the East who is always in the wrong place, at the wrong time and on the wrong side of the issues?

VinceFostersGhost's picture

 

 

Ummmm.......ahhhhhh.......I'll take Spiderman!

Kickaha's picture

You're biased.  She had you executed.

 

Tarzan's picture

For those loosing their ass today, JUMP you fuckers!

Tarzan's picture

Ummm, just where in the hell is MDB when you need another laugh.....

His silence is deafening.

FreezeThese's picture
FreezeThese (not verified) VinceFostersGhost Jun 24, 2016 8:32 AM

Too soon for QE?

GDTRFB1's picture

Well alrighty there boys and girls, get out your list for the fire sale prices coming(hopefully)

Lorca's Novena's picture

As Dave from the x22 report said last night, its possible that TPTB's new this would happen and WILL blame the people for the economic collapse. This may have ben planned so the douche elites can walk away....

https://www.youtube.com/watch?v=6Rn7-B4c5iY

thinkmoretalkless's picture

They better be wearing track shoes because no one is buying that.

918pigpen's picture

SOS ??  Shit On A Shingle?

LOL

Squid-puppets a-go-go's picture

hey tyler, where'd ya get that aghast stock-trader photo from?  U wanna check its copyright status wit king world news??

DownWithYogaPants's picture

Trump / Farage -------> now THAT would be heavenly.

Thoresen's picture

Farage sidelined by official Leave team. Farage tends to get portrayed unfairly as a racist, even though all the parties have now been forced to acknowledge immigration is a problem.
This referendum only came about because of Nigel and he should be given full credit.

Ghordius's picture

and... Farage's UKIP could give some credit to the EU Parliament's voting method for the rise of UKIP in the UK's political scene. lol

DrewJackson's picture

Right just like we can Thank Republican Party, Media, and establishment for TRUMP!!

thesonandheir's picture

Shouldn't have pumped markets up to near record highs then.

 

Hope a few of them jump today.

RaceToTheBottom's picture

Jumping should be the norm....

That would be progress.

JammersMills's picture

in someways, yah! there is no form of bad publicity! look what happened to that other nominee with the better economic plan. what was his name again....?

Transformer's picture

This referendum only came about because of Cameron, who used it to get re-elected.

fixed if for ya!!

William Finn's picture

New lows s on Deutschebank Bank. That dead man walking is the catalyst.

Mentaliusanything's picture

Relax the European banks are 'Fixed'. Japan has nothing to lose from this and Printing money has given us a new stable platform from which to grow........ Your right, absolutely Nothing to this.

For a second there I was shitting my pants ... Thanks

Jeffersonian Liberal's picture

This is fake fear.

They knew this vote was coming and they knew there was a good chance the Brexit would win.

That is why the PPT worked so hard to pump the Dow from its 15's up to nearly 18s, to give it some falling room should Brexit win.

Let's not forget that the Dow is where it is because the US government colluding with our Central Bank the Federal Reserve has pumped trillions through the discount window to the primary lenders not to lend but to invest in the markets and did so for three reasons:

1. To help the banks recoup their losses from the burstin of the dot com and housing bubbles

2. To pump the markets up so that people would be so happy they wouldn't peak behind the curtain

3. To continue the narrative that not only our prosperity but our very survival is completely dependent upon iron-fisted central management of every aspect of our lives

It's time for an Amexit vote to extract the US from all tyrannical forms of central management.

Government needs you to pay taxes's picture

Agree, we're all supposed to be full of panic for the brief moment when true price discovery is allowed to sort-of take place.  

I havent used any of my ammunition yet, or bartered any PM, or eaten any of the stored food.

Aint skeered.

Fisherman Blue's picture

Jack Pot Hedgers !  NUGT to the PTB mother fuckers .

DerdyBulls's picture

Derdy didn't follow the herd. Anyone think this took Soros by surprise? What a lovely weekend its going to be, man.

Max Cynical's picture

Can someone explain why markets are so roiled? This makes absolutely no sense. Assets were "fairly" valued yesterday and now they're not on the heels of Brexit? The UK didn't say they were pulling out of markets, they simply declared their independence.

Socratic Dog's picture

Excellent question.  It's almost like, I dunno, the whole thing's a farce or sumthin'.  Nah....

It's also worth pondering why all the coverage is about the effect on the "markets".  Fuck the markets.  Show me some effects on real people.

Although the jew media in Australia is saying this is a coup for Putin.  That's different.  Those motherfuckers hate him more than the neocons in the USSA.

Philo Beddoe's picture

What a shit show.  Probably a good time to BTFD. Hate to say it. 

Mentaliusanything's picture

Only if you think the European banks are "fixed"

Or that the central banks have any control now

Or if you think the US stock market is fairly valued

Or you think Russia will swollow Dick

Or you think

Fisherman Blue's picture

Bull shit this is just the begining.

Transformer's picture

"Wrong.  The Brexit is EXACTLY what they DO want.

 It's time to collapse the system so that they can rebuild with fewer freedoms for the people and greater power consolidation for the elite.

 The EU is NOT their end game.  They have no problem shutting it down to advance their bigger agenda.  The next step in their scheme (which is openly acknowledged by the power people) is toppling the world economy in preparation for their 2018 launch of a world currency.  

The Brexit fits right in line with this step. "


Fiscal.Enema's picture

Are you saying Trump, if he gets elected, is part of the conspiracy?

Blackfox's picture

Well Farage is an ex trader/banker.

Go Google image 'the economist 2018'  That's the date they predicted the one world currency in the 1980's - intresting stuff.

bnkrs vs Humanity's picture
bnkrs vs Humanity (not verified) Fiscal.Enema Jun 24, 2016 9:01 AM

This may be hard for you to believe bout right now Trump is one of the main players in the conspiracy, in fact everyone you see and hear on TV is or else they would not get any TV time.

Jeffersonian Liberal's picture

If that's the case, then EVERYONE is a part of the conspiracy and NO ONE can be trusted.

Including you.

Due North's picture

It is within the realm of possibility that Trump is a part of a co-opt against the success of the American people, but if the American people are true to their roots of Life and Liberty  then it won't matter.

In my opinion, this is the strongest chance for We the People to reclaim our sovereign rights since JFK. Every crisis is also an opportunity for people to wake up and take responsibility for their own advancement.

old naughty's picture

part of what conspirarcy?

please spell it out.

thinkmoretalkless's picture

The pee-ons may not go quietly.

QE4MeASAP's picture

I guess Jo Cox's arranged assassination wasn't enough.  Althouth her death was good for equity markets, at least for a while.