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Brexit: How the Vote Has Affect Markets Globally

Published June 24, 2016

union-jack-1567985.jpgOn June 23rd the United Kingdom (UK) voted to leave the European Union (EU). The UK consists of England, Scotland, Wales, and Northern Ireland. This process was commonly referred to as Brexit. As a result, Britain’s Prime Minister, David Cameron, who pushed for the UK to stay, announced plans to resign in three months. The vote came as somewhat of a surprise as the markets reacted positively to the upside earlier this week when polls indicated an increased likelihood that Britain would remain in the EU.

Concerns about the economic consequences of the vote are driving markets lower globally. 

  • British pound exchange rates declined as much as ten percent.
  • Conversely, the Japanese yen rallied dramatically.
  • Global equities traded lower.
  • U.S. Treasuries spiked as investors looked for a safe haven.
  • Oil prices declined roughly five percent.
  • Gold prices increased as a hedge to the market turmoil.

Going forward there are many economic and political uncertainties. The vote initiates a process that could take up to two years and possibly longer to implement. As this plays out, heightened volatility is a likely result, but not a reason to stray from your long-term investment process. In this type of environment, dislocations can present favorable investment opportunities for patient investors.

The last significant market correction occurred earlier this year, which brought to mind a quote from Benjamin Graham, considered by many to be the father of value investing. “In the short run, the market is a voting machine but in the long run, it is a weighing machine.”

Given that we are also looking toward an uncertain and unusual political environment and U.S. Presidential election this fall, it is likely that this statement will continue to hold true and the volatility will continue.

Written by North Star Resource Group.

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding any funds or stocks in particular, nor should it be construed as a recommendation to purchase or sell a security. Past performance is not indicative of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested.

Investment risks associated with international investing, in addition to other risks, may include currency fluctuations, political, social and economic instability and differences in accounting standards when investing in foreign markets.

Investments in commodities and natural resources involve heightened risk due to leveraging and speculative investment practices, lack of periodic valuation requirements and potentially complex tax structures.

CRI Securities, LLC, Securities and Investments, Investment Advisory Services. Securian Financial Services, Inc., Variable Products and Securities, Investment Advisory Services. Securities and investment advisory services offered through CRI Securities, LLC and Securian Financial Services, Inc., Members FINRA/SIPC. CRI Securities, LLC is affiliated with Securian Financial Services, Inc. Firm Headquarters: 2701 University Avenue SE, Minneapolis, MN 55414

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