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Business

Global markets brace for Brexit bombshell

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Opening sequence

Business

Global markets brace for Brexit bombshell

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COMING UP:Global markets brace for Brexit bombshell

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Transcript

00:00:00
>> Brexit is going global. Financial markets around the world are on a knife edge as Britain's EU referendum goes down to the wire. I'm Jamie McGeever, Reuters chief markets correspondent in London. And I've been following every twist and turn of Britain's EU referendum debate and looking forward to what we can expect on global markets on June the 24th, the day after that referendum.
00:00:22
>>
INAUDIBL
]>> No corner of the financial universe will be left untouched if Britain votes to leave the European Union. Investors will probably pile into safe haven assets, such as gold and government bonds. Interest rates have never been lower around the world. If Britain votes to leave the EU, you might see central banks around the world easing policy further, so rates could go even lower.
00:00:47
Currency traders will no doubt rush for the safe havens of the Swiss Franc, the US Dollar, in many cases, but especially the Japanese Yen. Now the Japanese Yen has rallied this year about 30%. It's put huge pressure on the Bank of Japan. The last thing policy makers in Tokyo want is a stronger currency.
00:01:06
They want a weaker currency, to help boost their exports, their competitiveness, their economy. Sentiment and equity markets has been pretty poor the last month or so. Global factors at play here. Uncertainty over the US economy, the Fed and China, etc. But I think it's safe to say if Britain was to leave the EU that sentiment would deteriorate even further.
00:01:25
Some major markets are already in bear market territory. Italy, for example, is down more than 20% this year. Banks are weak, financial stocks are very weak, I think it's safe to say that stock markets would fall further. Some people say that the FTSE, Brittain's main market would fall by 10%, 15%, in the event of Brexit, and that would, no doubt, ripple around the rest of the world.