Financial markets plunged into major turmoil today after Britain’s stunning decision to leave the European Union, sending the British pound to one of its largest single-day losses and touching off sweeping stock sell-offs on Wall Street and around the world.
The leading U.S. stock indexes also got pummeled as soon as trading floors opened, The Washington Post reports.
The Dow Jones Industrial Average dropped more than 500 points in the first few minutes of trading. Though it pared those losses, the index remained deeply in the red. The broader Standard & Poor’s 500-stock index and the tech-heavy Nasdaq both fell more than 2%.
The huge declines were part of cascading panic that began in Asia and rippled throughout Europe and Wall Street.
Analysts say it could be just the opening blast of months of upheaval—or longer—as traders and investors access the fallout from Britain’s European Union break. Economists warned that the decision significantly raised the risk of another global downturn.
“Instability in Europe is going to have worldwide repercussions, especially at a time when growth around the world is so low,” says Cornell University economist Eswar Prasad.
International economic policymakers released a joint statement warning that financial volatility could have “adverse implications for financial and economic stability.”
But beyond the immediate financial volatility, Britain’s decision unleashed a wave of uncertainty over the future of the nation’s economy and its relationship with the rest of the world.
The decision comes at a delicate time for the global economy, which has already been battered by falling prices for oil and other natural resources and slowing growth in China. Indeed, the volatility in financial markets was reminiscent of the wild swings at the beginning of the year that stoked fears that the world could tip back into recession. Many of those concerns had dissipated in recent months amid strength in the U.S. economy and calm overseas, but they were revived again today.
