RARELY can the market mood have changed so quickly. As the EU referendum polls closed at 10pm, investors were confident of a Remain win. The opinion polls released during the day, and at the close, showed Remain with a decent lead. Gambling markets showed that the probability of a Remain vote was close to 90%.

The pound hovered around $1.50, and the FTSE 100 index had closed the day ahead. But as the first results from the north-east came in, showing an unexpectedly large degree of support of Leave, the pound plunged.

By 4am, the gambling markets had flipped to discounting a Leave victory. The pound was suffering one of the worst days in its history, dropping to $1.35, around its lowest level since 1985. The FTSE 100 index was predicted to be down by around 500 points, or almost 8%, when the markets open in the morning.

There were knock-on effects in the rest of the world. The Nikkei 225 in Japan was down by 3% and Dow Jones futures in New York were showing a similar decline. The euro also dropped by 3% against the dollar, with Britain's departure likely to have a adverse impact on...Continue reading