Brexit: North American markets tank in early trading after British vote

TORONTO – The vote by Britain to leave the European Union left stock markets around the world bloodied amid concern that fallout from the decision would hurt global economic growth.

North American markets were caught up in the carnage, but the consequences for Toronto were cushioned by gains in the gold sector, a traditional refuge in turbulent times.

Bruce Cooper, chief investment officer at TD Asset Management, said investors are wondering if the vote is the first step toward a slowdown in the global economy.

“A big question that markets are asking themselves is how negative will this be for global economic growth,” Cooper said.

WATCH: ‘Brexit’ referendum sends New York Stock Exchange plummeting

2:21 ‘Brexit’ referendum sends New York Stock Exchange plummeting

“We don’t have the answer to that yet. I think what markets are telling you is we think it is going to be negative, we’re not sure exactly how negative.”

However, Cooper noted that the Toronto market was still up about seven per cent for the year so far and U.S. markets are near record highs.

The Toronto market plunged at the start of trading Friday before regaining some of the ground lost. The S&P/TSX composite index was down 199.30 points at 13,932.08 in early afternoon trading.

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The Canadian dollar fell 1.17 U.S. cents to 77.13 cents U.S.

Markets had gained ground earlier this week as markets bet that Britain would vote to remain part of the European Union.

In New York, the Dow Jones industrial average was down 508.66 points at 17,502.41, while the S&P 500 dropped 62.85 points to 2,050.47. The Nasdaq composite lost 173.44 points to 4,736.60.

Germany’s DAX fell almost seven per cent, France’s CAC dropped nearly eight per cent and Britain’s FTSE dropped a little more than three per cent.

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Meanwhile, the British pound plunged to levels not seen since the mid-1980s. It was down 12.89 cents or 6.7 per cent to C$1.7826 and lost 12.53 cents U.S. or 8.3 per cent to US$1.3763.

The euro lost ground against the Canada dollar as well, falling 0.9 of a cent to C$1.4458.

G7 finance ministers and central bank governors moved quickly to reassure markets they had taken steps to ensure adequate liquidity and to support the functioning of markets.

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“We affirm our assessment that the U.K. economy and financial sector remain resilient and are confident that the U.K. authorities are well-positioned to address the consequences of the referendum outcome,” the group said.

In commodities, the August contract for crude oil fell US$2.33 to US$47.78 a barrel, while the August contract natural gas fell 3.3 cents to US$2.704 per mmBtu.

Gold was the lone bright spot as the August contract gained US$56.10 to US$1,319.20 a troy ounce.