Economy. A financial shock wave washes over the world after the news that the British want to leave the EU. Stock markets plummet and the pound has collapsed. Even the Swedish krona takes a beating.
On Midsummer afternoon the London Stock Exchange fell by over four percent. Particularly hard hit by the turmoil brexit-news to major banks, all of which had plummeted by about 20 percent, and airlines.
On the other leading European stock markets was the fall even greater. Frankfurt Stock Exchange stood at minus seven per cent and the Paris Stock Exchange had lost nearly nine percent.
The Stockholm Stock Exchange is closed because of the midsummer celebrations.
The declines in Europe following the sharp stock market collapse in Asia. Tokyo Stock Exchange at the close plummeted by nearly eight percent. In the US case on the stock markets considerably more subdued. After about a half hour of trading the Dow Jones Industrial Index fell more than two percent, decline in the Nasdaq Composite Index was slightly larger.
“Sweden is well equipped”
Finance Minister Magdalena Andersson (S) does not think it is strange with the strong market reactions, but it remains to be seen how long they will be. She emphasizes that the Swedish economy is well equipped with strong public finances, well-capitalized banks and the authorities stand ready to take action.
– What happens in the long term depends on which trade will be between the UK and the EU, says Andersson.
Leave-side profits also received the British pound tumbling by nine percent to just under 1:35 dollars, the lowest level since 1985, before a recovery took place.
– All anticipated a stay-profit, says Nordea’s chief strategist Jan von Gerich.
Turbulent time
in the short term, you do not be worried about the Swedish economy, according to Anna Breman. But there will be turbulence in the financial markets for some time, she said.
– It will be messy to come, we will need to see some kind of action by central banks and clear statements from politicians to try to calm this.
She was heard this morning. The Swiss central bank intervened to stem the franc’s gain, the European Central Bank (ECB) declared itself prepared to inject additional liquidity into the financial markets and the Bank of England said that “all necessary measures” to ensure stability will be taken.
First, after lunch spoke Riksbank and Finansinspektionen (FI) in brexit issue:
“We are prepared to take the necessary measures to deal with disruptions in the financial markets,” wrote the Riksbank, adding that it has contact with the authorities, other central banks and the Swedish banks.
“FSA follows the developments in the financial markets and have an ongoing dialogue with the Ministry of finance, the Riksbank and the Swedish National Debt Office,” wrote the FI.
krona weaker
the Swedish krona has taken a lot of beating in turmoil. A dollar cost by lunchtime SEK 8.50 and one euro cost SEK 9:45.
– It depends on the financial markets seek out safe assets, says Anna Breman, which expects to the exchange rate will fluctuate sharply for some time to come.
While other financial markets shaken vigorously by brexit-slip. World prices for oil have fallen by around five percent. But the price of gold, traditionally regarded as a safe investment, has risen considerably.
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