Via Dave Lutz, head of ETFs at Jones Trading, here’s a quick guide to what traders are talking about on this chaotic Friday:
Morning — Wow. UK Out (51.9% to 48.1%), Those below 24years old were 75% remain, “Leave” overwhelmingly voted by those over 50. Cameron to resign within 3months – Boris Johnson the bookie favourite to replace him.
FTSE Futures were off nearly 9% at one point, Down “only” 3% now. Of interest, confidence in EU has collapsed — DAX and EuroStoxx off 6%+. What’s interesting is that the French CDS (+50bips) has moved significantly more than the UK CDS (+40 bips) notes our London Office. Italy is off 10% as Banks across Europe get decimated — EU Bank Index off 13%, London Banks off 10%, halving losses while Homebuilders are getting smoked by nearly 25%. Gold Miners ripping higher.
Asia was a bloodbath — Nikkei off 8%, Aussie -3%, Hong Kong -3% and China -1.3%.
ES traded below 2000, losing 5.5% and triggering trading halts – Has almost cut those losses in half after a sharp bounce off the 200dma, 2050 1st line of heavy resistance, 2068 50dma as well. VIX was +52% earlier. Let’s see if the buy tickets emerge as US Traders get going, this is smelling like a big “Buy the News.”
In FX: Sterling falls to lowest level since 1985 – USD/JPY briefly drops below 100 to a 2 1/2-yr low — Heavy chatter BOJ stepped in there. DXY leapt thru the 200dma above 96.50 before retreating. Swiss National Bank became the first bank to intervene directly in the markets.
In Commods: Havens on FIRE: GOLD traded as high as $1358, currently up 5%. US 10YY takes out nearly 4year lows. Touched 1.4% before springboarding. German 10Y Bunds dove below -15bp, now at -6bp. Industrial commods smacked — Copper and Zinc off 2%, Oil off nearly 4%.
- Exane Sees 10-15% Downside for Europe Shares in Next Few Days
- Morgan Stanley sees cable around 1.25-30, 15%-20% drop in European equities
- UBS suggest GBP vs $ 1.20 and parity with Euro in long-term.
- Stoxx 600 Downside Potential Seen at 16% Today: BofAML
- London Office Values May Drop 20% on Brexit, Green Street Says
- Standard Life, Similar UK Insurers to Be Severely Hit: Bernstein
- Won’t overlook PBOC action this weekend (CSLA)
- BOE cutting interest rates by midday U.K. time today (Saxo Bank)
- Denmark, Sweden and Austria mentioned as other countries potentially looking to leave EU (Farage)
- Result has opened ‘Pandora’s Box’ for London housing market – Real estate company JLL has predicted an immediate slowdown of 10pc to 15pc in UK housing market transactions, with current levels not expected to return until 2018. Hometrack adds that, historically, external shocks have been known to reduce sales volumes by up to 20pc.