EUROPE MARKETS: European Stocks Drop To 4-month Low As Brexit Fallout Continues
28 June 2016 - 2:19AM
Dow Jones News
By Sara Sjolin, MarketWatch
European banking index slides to lowest since Nov. 2011
European stock markets suffered another rout territory as the
historic Brexit referendum last week continued to cast a shadow
over global financial markets.
The Stoxx Europe 600 index lost 4.1% to 308.75, closing at its
lowest since mid-February.
Monday's loss followed a 7% slide on Friday
(http://www.marketwatch.com/story/european-stocks-face-worst-day-since-1987-as-uk-votes-to-ditch-the-eu-2016-06-24),
when the pan-European benchmark posted its worst session since
October 2008--in the wake of the Lehman Brothers bankruptcy--after
the U.K. voted to leave the European Union
(http://www.marketwatch.com/story/brexit-is-reality-uk-media-says-2016-06-24).
"Uncertainties following the U.K.'s decision to leave the
European Union with last week's referendum will continue to be a
source of volatility for global equities, and global equity indices
could drop to far lower levels in the coming weeks," analysts at
Société Générale said in a note.
The U.K.'s FTSE 100 index slid 2.6% to 5,982.20 on Monday
(http://www.marketwatch.com/story/ftse-100-slides-as-brexit-continues-to-spook-traders-2016-06-27),
with the banks posting some of the biggest losses. Traders also
continued to dump the pound , sending sterling down to a fresh
31-year low at $1.3121, from $1.3676 late Friday in New York. The
currency had momentarily steadied Monday morning after U.K. finance
minister George Osborne stressed the country is strong enough to
deal with the coming challenges
(http://www.marketwatch.com/story/uks-osborne-tries-to-calm-markets-with-post-brexit-speech-2016-06-27).
Read: Why FTSE 100 is suffering less than its European
counterparts after Brexit
(http://www.marketwatch.com/story/why-ftse-100-is-suffering-less-than-its-european-counterparts-after-brexit-2016-06-24)
The pound briefly traded below $1.32 on Monday--the lowest since
1985.
The unexpected referendum result also sent shock waves through
the U.K. parliament, leaving the two biggest political parties in
turmoil. British Prime Minister David Cameron said Friday morning
he'll resign
(http://www.marketwatch.com/story/uk-prime-minister-david-cameron-resigns-after-brexit-vote-2016-06-24),
while leader of the opposition Labour Party Jeremy Corbyn over the
weekend sacked a key member of his cabinet seen as plotting a coup
against him. On Sunday, that dismissal was followed by the
resignations of 11 other key party members in a protest against
Corbyn's leadership. More resignations followed on Monday.
Read:5 charts that show how Brexit backlash continues to thrash
the markets
(http://www.marketwatch.com/story/5-charts-that-show-how-brexit-backlash-continues-to-thrash-the-markets-2016-06-27)
The Brexit vote has further raised new questions about the
future of the EU. Euroskeptic parties on the rise in other member
states--such as Denmark, Sweden, Holland and Italy--are now calling
for their own referendum, which could see the union face more
uncertainty in coming years.
Spanish election: However, Spain was seen as providing a glimmer
of hope on Monday. The conservative People's Party of acting Prime
Minister Mariano Rajoy won the most seats in the country's
parliamentary election
(http://www.marketwatch.com/story/conservative-spanish-prime-ministers-party-appears-ahead-in-national-selections-2016-06-26)
on Sunday. Analysts said a "flight to safety" following the U.K.'s
Brexit vote had helped traditional parties gain seats.
However, with Rajoy's party short of a majority, Spain could
face further political deadlock as he attempts to form a coalition
government.
The IBEX 35 index opened with gains, but ended lower with the
rest of Europe, down 1.8% at 7,645.50.
Other indexes: Germany's DAX 30 index fell 3% to 9,268.66, while
France's CAC 40 index also dropped 3% to 3,984.72.
The euro fell to $1.1013, down from $1.1117 late on Friday.
U.S. stocks also traded with sharp losses on Wall Street
(http://www.marketwatch.com/story/us-stocks-set-for-losses-as-brexit-backlash-continues-2016-06-27).
Read:S&P 500 could drop as much as 7% in Brexit swoon
(http://www.marketwatch.com/story/brexit-sparked-volatility-will-continue-to-weigh-on-us-stock-market-2016-06-25)
Movers and shakers: Shares of EasyJet PLC (EZJ.LN) (EZJ.LN)
slumped 22% after the budget airliner issued a profit warning
(http://www.marketwatch.com/story/easyjet-warns-on-profit-citing-brexit-uncertainty-2016-06-27),
saying the economic and consumer uncertainty in the aftermath of
the referendum is likely to hit revenue.
U.K. banks, which at one point suffered losses around 30% on
Friday morning, continued to fall on Monday. Royal Bank of Scotland
Group PLC (RBS.LN) (RBS.LN) dropped 15%, Barclays PLC (BCS) (BCS)
fell 17%, and Lloyds Banking Group PLC (LLOY.LN) (LLOY.LN) lost
10%.
Banks outside the U.K. also slumped on Monday, with shares of
Credit Suisse Group AG (CSGN.EB) (CSGN.EB) off 9.2%, Deutsche Bank
AG (DBK.XE) (DBK.XE) down 6.2% and Société Générale SA (GLE.FR)
8.4% lower.
The Stoxx Europe 600 banks index plunged 7.7%, closing at its
lowest level since Nov. 2011.
(END) Dow Jones Newswires
June 27, 2016 12:04 ET (16:04 GMT)
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