The country has voted to leave the EU, and the stock market has responded by falling 6% in early morning trading.

Sterling has also fallen sharply in international currency markets, and now stands at its lowest level against the dollar for over 30 years. It fell to $1.32 this morning, but has currently bounced back to around $1.37 (8.45am). The euro has also fallen against the dollar and now stands at $1.11. The table below shows the immediate reaction of some key market indicators.

Laith Khalaf, Senior Analyst, Hargreaves Lansdown: ‘Global stock markets have taken a Brexit hit, with European markets actually falling more than the Footsie. Safe haven assets have soared as investors sought security, with gold rising 5% and UK bond yields plunging to historic lows. On the stock market, banks and housebuilders have been hit particularly hard this morning as markets try to factor in the Brexit effect on the UK economy.

Sterling has fallen to its lowest level for over 30 years , which will mean holidaymakers heading abroad in the coming weeks will have to dig extra deep to buy foreign currency. Investors should carefully consider their plans and avoid a knee-jerk reaction. The coming days are likely to be choppy on the stock market as it digests the ramifications of Brexit, and further falls are possible. However markets will bounce back at some point, and investors who switch to cash risk buying back into the market at a higher level, and ending up in a worse position than if they had just stayed put.’ 

Initial reaction

*to 8:45am 

What should investors do?

Investors should avoid a knee-jerk reaction- the market has been pricing in the chance of a Brexit for some time, and now the UK has voted to leave, prices have already fallen sharply. There is likely to be more volatility to come, and there could be further falls, but when stock markets fall sharply, there is usually a correction at some point along the line. If investors try to time the market, they could well miss upswings and actually eventually end up paying a higher price when they eventually enter the market. 

Trying to time trades in markets which are volatile cannot be done with precision, and investors need to be very wary of getting ‘whipsawed’- repeatedly selling low and buying high, and gradually eroding capital.