Markets Overview: (Source: Bloomberg, FT, Reuters, DJ Newswires)

UK 100 called to open -560pts at 5780, having fallen back sharply overnight from fresh 2016 highs of 6450 but yet to get anywhere near a test of this year’s 5500 lows. The Bulls will be hoping the sell-off is overdone and that support around 5750 means a rebound opportunity has presented itself. Bears will be eyeing any suggestions (test of 5700?) that further weakness may be on the cards. Watch levels: Bullish 5805, Bearish 5715.

Calls for a very negative and volatile European open come after the UK’s referendum on EU membership delivered a surprise overnight vote to Leave which financial markets are interpreting as opening the door to significant uncertainty for what could be a protracted period. Based on the best performers from last Thursday’s lows, on hopes a Remain vote would result, expect the hardest hit stocks to comprise financials (banks, insurance), housebuilders and commodities related-names (miners, oil) on the perceived impact to global growth, the very interconnected financial sector and of course the UK’s precious property market.

Asian markets are nursing significant losses with Japan’s Nikkei (-8%) exporters being hurt by a Yen rally, an alternative to Gold as a safehaven. Australia’s ASX (-3%) is being weighed down by a 5% drop in Oil prices impacting the Energy sector, while a 10% plunge in GBP and 3% rally by the USD Basket (another safe haven, albeit less so) is having its traditional negative knock-on for commodity prices and their sensitive dual-listed mining contingent as well as the fears about the knock-on for global growth. Financials also pain.

While nothing changes today, everything’s changed. Brexit is upon us, although politicians are unlikely to rush to trigger Article 50 and start messy divorce proceedings with the EU. Are we seeing the toppling of the first of a set of referendominos, signalling the beginning of the end to the European project? Those pollsters will never be trusted again.

With much wailing and gnashing of teeth pervading global market sentiment and circuit breakers in effect in some global indices, note UK and US equity markets are (dare I say ‘only’...) plumbing levels last seen earlier this year. Dow Jones futures are currently back around May lows having been as low as 17,277 - a level last seen in March. Not quite the 30-year trough the GBP/USD pair (Cable) currently finds itself in. This is interesting.

As confirmation sinks in, there is of course potential for further US equity declines with (again) risk plays like miners and financials likely the biggest fallers. Contagion likely to spread to all sectors initially, with defensives and precious metals the destination of choice as things begin to calm. All that said, spicy trading conditions beckon.

Crude prices are bouncing, but will be nursing losses nonetheless on a much stronger USD and heightened global growth concerns given the potential imminent breakup of the EU (right wing factions in France and the Netherlands calling for referenda of their own). Deal with that one, Mr. Saudi Oil Minister!

Gold made a 2 ½ year high, now selling back slightly yet the potential for further haven seeking remains high as equity index futures consolidate. Keep an eye on gold miners Randgold Resources (RRS) and Fresnillo (FRES).

In focus today will be little else from the UK electorate’s desire to leave the European Union with a surprise overnight win for the Leave campaign. While nothing changes today, a lot may change in the future. And not just here, but on the continent too. Welcome to a new world.

Whether macro data has much influence today remains to be seen, but we do have French Q1 GDP being confirmed and German IFO Surveys seen pretty much flat. UK BBA Home Loans are seen falling in May based on understandable Brexit uncertainty on the UK property market.

In the afternoon, US Durable Goods Orders, which tends to be volatile from month to month, are seen falling in May although US June Consumer Confidence is seen confirmed holding up around 12-month highs. The Baker Hughes Rig Count will let us know if any more land-based US drillers have been tempted back to the game by oil’s return to $50/barrel which could have ramifications for a rebalancing of the Oil market.

While China’s PBOC Governor was scheduled to speak late in the day, and his comments are important, we also expect to hear from major world leaders (Cameron, Merkel, Hollande) and central bank heads (BoE, ECB) about how they see things playing out for financial markets and their plans to limit any negative contagion following the Brexit vote.

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UK Company Headlines: (Source: Reuters/DJ Newswires)

• The UK electorate has voted to leave the European Union
• BHP Billiton Cautions of Ongoing Volatility After UK Vote
• Barratt Developments Prepares for Uncertainty After U.K. Vote
• Standard Chartered Shares in Hong Kong Tumble 13.4% to HK$55.25 on Brexit
• HSBC Down 12.2% at HK$44.60 as U.K. Votes for Brexit