$2.1 trillion wiped out in Brexit shock

Investors weren't expecting Britain to vote to leave the EU and the shock sent world financial markets tumbling, losing a combined $2.1 trillion. The question now is how long the shock will last and how much damage will be done.

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Global markets lose $2.1 trillion in Brexit rout

London,  AFP – Britain's shock vote to pull out of the European Union wiped $2.1 trillion from global equity markets Friday as traders panicked in the face of a new threat to the global economy.

Investors fled to the safety of gold, the yen and blue-chip bonds as the seismic shift in the structure of Europe left many huge questions hanging, including who will lead Britain following the resignation of Prime Minister David Cameron.

The Brexit vote sparked eight percent losses in the Tokyo and Paris bourses, nearly seven percent in Frankfurt and more than three percent in London and New York.

Central banks stepped in to bolster confidence, promising to inject liquidity where needed and appearing to mitigate some of the sharpest losses.

Still, the pound crashed 10 percent to a 31-year low at one point, before rebounding slightly for a 9.1 percent loss against the greenback in late trade.

The euro also plummeted, dropping 2.6 percent on the dollar.

An arrangement of newspapers pictured in London on June 24, 2016, as an illustration, shows the front page of the London Evening Standard newpaper reporting the resignation of British Prime Minister David Cameron following the result of the UK's vote to leave the EU in the June 23 referendum. Cameron is pictured holding hands with his wife Samantha as they come out from 10 Downing Street. Britain voted to break away from the European Union on June 24, toppling Prime Minister David Cameron and dealing a thunderous blow to the 60-year-old bloc that sent world markets plunging. / AFP PHOTO / Daniel SORABJI

Benefitting from a massive safety selloff, gold jumped nearly five percent and the yen surged 4.2 percent against the dollar and 7.0 percent on the euro. The dollar at one point fell below 100 yen for the first time since November 2013.

Analysts say the split of Britain with the EU could slow trade and investment in the country and hit its key financial industry, possibly pushing the economy into recession.

"The vote is creating a tremendous amount of uncertainty. Uncertainty often freezes expansion decisions... it means that the global economy will grow more slowly," said James Chessen, chief economist at the American Bankers Association.

The Dow Jones Industrial Average registered its largest single-day point fall since 2011, losing 610 points.

Milan slumped 12.5 percent, and Madrid lost 12.4 percent on jitters ahead of Spanish elections on Sunday.

With London's claim to the world's leading finance center on the line with the EU divorce, banks were heavily sold Friday. Many global banks say they expect to relocate staff to elsewhere in the European Union in anticipation of the breakup.

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