US markets have opened more than 2 per cent lower following the UK’s decision to leave the EU, however, the FTSE has rebounded to regain much of its previous losses.
The S&P 500 has dropped 2.26 per cent in trading so far, seeing the sharp selloff following the UK referendum. In particular financials and technology sectors have been hit as investors seek safe havens.
The US Dow Jones average fell by more than 500 points at market open, with investors moving into safe haven assets such as the dollar, gold and US Treasury bonds.
The technology-focused Nasdaq index has seen a larger hit, falling 3.7 per cent on open.
The so-called ‘fear index’, the Vix, which is a measure of expected S&P 500 volatility over the next month, rose by 40 per cent, marking its biggest increase since August last year.
Columbia Threadneedle global head of fixed income Jim Cielinski says: “Core bond markets have rallied sharply – as market yields have plunged to record lows in many developed markets. The benchmark 10-year US Treasury bond, for example, is lower in yield by around 20 basis points. This takes that yield to around 1.5 per cent, the lowest in recent decades.”
However, the FTSE 100 has rebounded from its previous falls today, which at one point saw an 8 per cent drop.
The blue chip index is now sitting above levels seen on Monday morning, standing at 6,182.25, compared to Monday’s open of 6,126.27. The index is still 2.24 per cent down on the day, at time of publishing.
The FTSE had previously rallied earlier in the week, when a Remain vote looked increasingly likely, with the gains from that rally now wiped out.
However, the FTSE 250 has been hit harder and remains down 6.82 per cent on the day. It stands at 16,149.89, down on the 16,688.41 seen on Monday morning.
Sarasin and Partners fund manager Lucy Walker says part of the market rally could be due to opportunities for US traders to pick up cheap UK stocks with the weak pound and support the market. However, she warns that must be weighed up against huge uncertainty in the UK market.