BREXIT – Now that we know the outcome what happens next.
In short nobody knows, but expect a long period of confusion, uncertainty and market volatility. Initial market reaction is significant currency weakness as would be expected.. Sterling -6% vs EUR and -9% vs USD in what is a bigger move that we saw during the teeth of the financial crisis in 2008. Gold is doing it’s job as classic insurance hedge brilliantly, +5% in USD and +8% in EUR. Stock markets in Europe are not open yet but expected to open -5% to -8% roughly. The S+P futures in the US are -4%.
The Bank of England, ECB and US Federal Reserve will likely provide liquidity to the banking sector if needed and expect statements to that effect as the morning wears on.
I believe this is a bad outcome for the UK and more broadly for all of Europe, raising the risk of exit referendums across the continent with pressure coming from anti-establishment groups, and impacting negatively on trade and employment. Although it may not have a direct impact on November’s US presidential election, I think it will lead to people raising the odds of a Trump win as the anti-establishment theme continues to grow.
For Ireland this outcome is bad news. Our agri/foods exporting business will suffer from a weaker sterling, as will our tourism industry where Britain remains our biggest source market for overseas tourists, representing 42% of all such visits (according to Failte Ireland). There may be a slight positive for finance jobs in Dublin if jobs move from London to elsewhere in the EU. The consequences for the North (border controls a possibility?) cannot be good.
Let’s think investments for a minute… Market timing is generally a fool’s errand, but for those with greater than usual allocations to cash, big corrections can be good opportunities to put some money to work. Call today to discuss your options. New clients qualify for a free initial consultation.
John McWey, Ardbrack Financial. 021-4773833 / info@ardbrack.com
7:30am 24-Jun-16
