Kiwi surges, shares rally ahead of Brexit vote

(Newshub.)
(Newshub.)

The financial markets were expecting a victory for the 'Remain camp' in the Brexit vote, but with the referendum on a knife edge, currency markets are getting the jitters.

The pound has taken a pounding, at one stage dropping 4.4 percent, after early strong results for the 'Leave' camp.

It fell to US$1.40 before recovering and then dropping back down again to US$1.40 as the referendum lead see-sawed.

The Kiwi rose one percent overnight to 72.40 US cents. That is the highest it has been since May 2015. However, it's now pulled back as currency traders prefer the safe haven of the US dollar.

The Kiwi has risen seven percent this month against the US dollar, but could give up all of those gains if the 'Leave' camp triumphs.

The New Zealand dollar has regained some lost ground against the pound after the 'Leave' camp took the lead. The Kiwi was sitting at 50.81 pence at 2.30pm.

European stock markets are currently shut but had closed up before results were announced.

The Dow Jones Industrial Average topped eighteen thousand points when it closed at 8am New Zealand time.

It rose 1.29 percent, or 230 points to finish at 18,011 points.

The broader S&P500 rose 1.34 percent, or 28 points to close at 2113.

The tech heavy NASDAQ gained 1.59 percent, or 77 points, to finish at 4910 points.

The UK's FTSE index rose by 1.23 percent.

Germany's Dax surged by 1.85 percent and France's CAC40 gained almost two percent.

The certainty that 'Remain' will win means things could turn very nasty on the financial markets if Leave triumphs.

Analysts say the pound could fall by between ten to thirty percent in value.

There would also be a sell-off on global stock markets.

That is the reason that the big investment banks have extra staff on hand to react when the result comes in.

Britain's stockbrokers have also beefed up their IT systems to make sure that their computer systems can cope.

Many "mum and dad" investors have steered clear of shares in the run up to the result. They could return to the markets once a result is known, especially if it is win for the 'Remain' side.

There are also around 75,000 individuals who trade the currency markets in the UK and around 100,000 in the United States.

A win for the 'Leave' camp would mean a volatile time for the markets. How long that could go on is anyone's guess.

Markets hate uncertainty and a win for the 'Leave' supporters would send the UK into unknown territory.

Newshub.

Share to Facebook Share to Twitter Share to Email
Share to Facebook Share to Twitter Share to Viber Share to WhatsApp Share to Email