British stocks are heading for the biggest crash in decades after the country voted to leave the European Union.
FTSE 100 stock futures are down 8%, pointing to the biggest market slump since 1987. The pound has dropped to its lowest level in more than 30 years. The markets are set to open at 8 a.m. local time/3 a.m. ET.
“The financial markets have certainly taken the view that the decision to leave the European Union is bad news for the United Kingdom in the near term at least,” said Howard Archer, chief economist at IHS.
Banking stocks are poised to be the biggest losers, analysts predict. “We expect the hardest hit stocks to be financial (banks, insurance) followed by house builders, with commodities-related names (miners, oil) following close behind,” said Mike van Dulken, head of research at Accendo Markets.
London is the world’s leading financial center and the vote to leave the EU has triggered huge uncertainty about the future of its banking sector.
British banks whose stocks are traded elsewhere in the world have already seen big slumps.
Shares in HSBC crashed 11% in Hong Kong. Standard Chartered was down 12% and Prudential down 11%.
Unlike many major markets around the world, the London Stock Exchange doesn’t have mechanisms to halt trading in all stocks if there’s a crash.
But it can suspend trading in individual shares.