The Dow Jones Industrial average dropped more than 350 points on Friday morning as markets around the world reacted to a vote by citizens of the United Kingdom to leave the European Union.
The Dow fell as much as 538.27 points and the S&P 500 dropped as much as 58.49 points in the first minutes of trading.
Blindsided by the winning “Leave” vote, global investors fled the market in search of safe havens such as gold, the Japanese yen, and U.S. Treasuries. As investors scrambled for any port in a storm, the dollar rose by more than 3 percent — the most in one day since 1978 — and gold soared to a two-year high, reaching 1,000 pounds an ounce.
The Dow Jones fell 500 points before the opening bell, matching last week’s numbers when markets were expecting a Leave vote.
“It’s going to be ugly,” Mike Ellingsen, a trader at U.S. Global Investors Inc in San Antonio, Texas, told Reuters. “Obviously markets were not pricing this in.”
Oil prices, which had remained strong for the past few weeks due to global outages, sank by 6 percent but are expected to stabilize. In early trading Friday, West Texas Intermediate crude held at around $47 a barrel.
“The Federal Reserve is prepared to provide dollar liquidity through its existing swap lines with central banks, as necessary, to address pressures in global funding markets, which could have adverse implications for the U.S. economy.” the Federal Reserve’s Board of Governors said in a statement on Friday morning.
“The United Kingdom and the European Union will remain indispensable partners of the United States even as they begin negotiating their ongoing relationship to ensure continued stability, security, and prosperity for Europe, Great Britain and Northern Ireland, and the world,” President Obama said in a statement released by the White House after the vote results were reported.
In Britain, the country’s largest banks all took a body blow, with Lloyds and Barclays both down 30 percent.
Federal Reserve Chair Janet Yellen had twice warned that a Brexit “could have consequences in turn for the U.S. economic outlook,” and last night’s historic vote certainly put an end to any speculation on a pending a rate hike. The Fed had no plans for an emergency meeting in the event of a leave vote, Yellen said this week.