Markets in turmoil as Brexit a reality

European stocks took a tumble on Friday, indicating that hardly anyone had penciled in a pro-Brexit vote, with markets sharply up on the previous trading day.

Germany's blue-chip Dax 30 dropped by almost 10 percent after the opening bell on the Frankfurt Stock Exchange, with the UK's FTSE 100 down 8.7 percent shortly after the open.

The German benchmark index experienced its worst drop since 2008, but pared back some of its losses in mid-morning trading. Banks were hit hardest by the plunge, with both Deutsche Bank and Commerzbank down around 17 percent in early trading.

Euro STOXX bank futures had slumped by more than 17 percent, putting them on track for their biggest ever one-day drop after Britain voted to leave the European Union. Auto futures had fallen by 13 percent on concerns the sector would be hit hard following the oucome of the referendum.

London's FTSE stocks closed the day down 3.2 percent, Frankfurt stocks lost 6.8 percent and Paris stocks, taking the hardest hit of the three, ended 8.0 percent lower.

Deutsche Bank Chief Economist David Folkerts-Landau said in a statement Britain and Europe nneded each other. "Brussels should therefore resist any pressure to inflict punitive measures on Britain."

Shock felt beyond Europe

US stocks plunged as well in the early hours of trading on Friday, though with less of a drop than in Europe. The Dow Jones Industrial Average shed nearly 500 points at the outset, hovering around a 3 percent loss through the day.

Earlier in the day, the specter of a British exit from the European Union and the pro-Leave outcome saw equity markets in Asia take a huge dive.

Tokyo was down a staggering 8 percent, while the stock exchange in Hong Kong tumbled more than 5 percent.

Highlighting the volatility across all markets, betting giant Ladbrokes tweeted that we were seeing "without doubt the craziest, fastest moving betting market in recent history."

Just the beginning?

In the weeks leading up to the Brexit vote, there had been widespread warnings that a "Leave" outcome would cause another rout across global markets that would wipe trillions off valuations, just months after a painful China-fueled selloff. With results trickling in from London, that doomsday scenario now seemed to be unfolding, analysts remarked.

The British pound collapsed on Friday morning to a 31-year low. Sterling dipped by roughly 10 percent, hitting its lowest level since the mid-1980s and marking the steepest one-day drop in its history.

At the same time, world oil prices plunged more than 5 percent in Asia. US benchmark West Texas Intermediate for delivery in August was down considerably, and so was Brent crude, also for delivery in August.

Central banks across the world were made ready to intervene in case intervention was deemed necessary to contain financial volatility.

hg/jd (Reuters, AFP, dpa)