Investment Clock insights

Comment on UK vote for Brexit

Trevor Greetham

24 June 2016

The outcome of the referendum is a major shock to stock markets and sterling, which were trading positively as the Vote Leave camp lost its lead in the polls.

Uncertainty about future trading and regulatory arrangements will act as a major drag on the UK economy, the world's fifth largest, and will have a knock on effect in Europe.

Unsurprisingly, stock markets have been hit very hard. This could create a longer-term buying opportunity for stocks as markets tend to overreact to bad news in the short term and there is a silver lining - turmoil in Europe will stay the US Federal Reserve’s hand in hiking interest rates and will probably trigger a new round of stimulus.

Whatever the UK is doing, most economies are expanding, monetary policy is loose and this is a positive backdrop for stocks.

The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.