The UK Brexit vote on Thursday, 23 June, 2016, to “Leave” the European Union (EU) appeared to catch the financial markets by surprise even though the opinion polls had been warning of a very close vote. On Friday, 24 June, 2016, the British pound fell sharply, over 7%. The US S&P 500 fell over 3%, while UK stocks, European exchanges, and Japanese stocks fell much more. As Japanese and global equities declined in value, non-Japanese sellers of Japanese equities covered their FX hedges, and the Japanese yen briefly strengthened below 100 against the US dollar, before rebounding based, in part, on Bank of Japan intervention. The VIX had its biggest one-day rise since the Chinese-induced sell-off in August 2015. Bank stocks in the European Union took a beating, falling 10% to 20%. On the flight-to-quality side of the ledger, US Treasuries rallied big and gold surged.
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