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Stunning Brexit vote rocks global stocks

MoneyWatch Headlines for June 24, 2016
Global fallout from Brexit vote, and other MoneyWatch headlines 01:11

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U.S. stock futures were sharply lower early Friday as investors tried to assess the U.K.'s surprise vote to leave the European Union. Dow Jones industrial futures were down nearly 3 percent, pointing toward sharp losses when trading opens. S&P 500 and Nasdaq futures were both both nearly 4 percent.

London's stock market fell more than 7 percent within minutes as markets opened on Friday morning, while shares of British banks collapsed as much as 30 percent in opening deals. Germany's main stock index dropped 10 percent in early trading following the news that the U.K. had voted itself out of the EU -- on track to be its biggest one-day decline ever -- and France's index tumbled about 7 percent.

The bloodshed was hardly limited to Europe. Japan's Nikkei 225 slumped nearly 8 percent, its biggest drop since 2008, while South Korea's Kospi index fell about 4 percent. Crude oil prices declined. Dow futures fell as much as 3.9 percent, and S&P futures plunged 5.1 percent, pointing to a weak opening for U.S. stocks.

In currency markets, the value of the pound plunged as much as 11 percent against the dollar, one of its biggest single-day falls in history, before recovering slightly to trade 6 percent lower at $1.39.

What happens if Britain leaves the European Union? 03:11

The U.K.'s stunning vote to leave the EU, dubbed "Brexit," shocked investors and market analysts. Although the historic referendum was expected to be close, most experts, along with betting markets, were predicting a win for the "Remain" camp, which was led by Prime Minister David Cameron.

Samuel Tombs, chief U.K. economist with Pantheon Macroeconomics, called Brexit a "leap into the unknown."

"U.K. voters have opted for Brexit," he said in a research note. "If fully followed through, this will be an act of economic self-harm with global ramifications."

T.D. Securities put the odds of the U.K. sinking into recession within the next 12 months at 60 percent.

Meantime, credit rater Stabdard & Poor's said the U.K. is likely to lose its AAA credit rating, which it called "untenable under the circumstances."

In the run-up to the referendum, analysts predicted that the U.K.'s departure from the 28-country block would likely cause U.S. stocks to slide in the short-term.

Over the longer term, many economists warn that a Brexit could spur political and economic turmoil in Europe, predicting that Euroskeptic parties in other EU states are likely to push for a vote on whether to leave the 28-country bloc.

-- The Associated Press contributed to this report.

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