While reading Friday morning papers and sipping coffee, investors might have been comforted by headlines from Thursday’s financial market performances:
“Global Stocks Rally Ahead of Brexit Vote… as investors bet the historic referendum would end with Britain staying in the EU.”
— USA Today
“Dow Industrials Jump 230 Points…Investors shook off fears that the U.K. would vote to leave the European Union, sending the Dow Jones Industrial Average to its biggest gains since March.”
— The Wall Street Journal
However, investors were in for a shock once they turned on the radio, television or their computers and received news of the U.K.’s fateful vote for Brexit.
Britain’s decision reverses the EU’s course of expansion as it has grown over decades to include most of Europe. In turn, the implications will be felt both politically and economically for years. The imminent danger to the underlying American economy is relatively small, however the decision will impact decades of economic integration and opening of markets.
It is important to note that, for all the shock and awe of the downward move in financial markets on Friday, the results only reversed the four day run-up in many stock markets in advance of the vote.
As your investment consultant, we are thoughtfully studying and investigating the long-term impact of this Brexit decision and how it might impact our investment strategies. At this time, however, portfolios have performed as expected with bonds increasing in value as stock markets gyrated around the world.