When the markets finally closed, more than $2 trillion had been wiped from the global exchanges. That was the biggest single-day drop in history, even worse than the $1.9 trillion selloff back in September 2008. According to Bloomberg’s Billionaires Index, the world’s 400 wealthiest investors lost a combined $127 billion on Friday.

“Brexit is the biggest global monetary shock since 2008,” David Beckworth, a scholar at George Mason University, wrote in a blog post on Friday. “This could be the tipping point that turns the existing global slowdown of 2016 into a global recession.”[1]

Currencies

As one might expect, the British pound was the hardest hit among the major world currencies. Sterling plunged to fresh 31-year lows against the US dollar, declining more than 11% as the final results trickled in on Friday morning. The GBP/USD exchange rate closed at 1.3684 Friday, down from 1.57 the previous day.

Losses weren’t contained to the British pound. The euro also plunged more than 4% against the US dollar through the overnight session before ending down around 2% at $1.1118. That was the lowest level in nearly a month.

Strong gains against the pound and euro pushed the US dollar index to more than three-week highs.

The biggest gainer in the aftermath of the Brexit vote was the Japanese yen, which soared to two-and-a-half year highs against the dollar Friday. The USD/JPY exchange rate briefly fell below 100 for the first time since 2013 before paring losses later in the day. In fact, gains in the yen were so strong that the Japanese government called an emergency press conference to warn against further lopsided movements in the currency.

The Brexit vote drove another stake into the heart of Abenomics, the broad stimulus program of Japanese Prime Minister Shinzo Abe. The Japanese currency has been surging all year long, creating fresh headaches for the Bank of Japan (BOJ), which is desperately trying to fight deflation.

Stocks

Britain’s vote to leave the European Union drove a dramatic decline in global equity prices, as investors came to grips with an uncertain economic and financial future that could drag on for years as London renegotiates a new trade deal with its European partners.

Japan’s Nikkei experienced the most violent selloff, posting its worst one-day decline since 2000.[2] Tokyo’s benchmark index plunged 1,286.33 points or 7.9% to close at 14,952.02. Elsewhere in Asia, Hong Kong’s Hang Seng Index fell 4.1%, the South Korean Kospi declined 3.1% and the Chinese CSI 300 Index dropped 1.3%.

European markets also sold off sharply, with declines in Spain topping 12%. France’s CAC 40 Index also fell 8%, while Germany’s DAX closed down nearly 7%. Losses on London’s FTSE 100 Index amounted to 3.2%. Meanwhile, the pan-European Stoxx 600 Index closed down 7%.

Wall Street experienced devastating losses, as US stocks declined in lockstep with their peers in Asia and Europe. Financial stocks posted their worst single-day drop since 2011, dragging the major averages sharply lower. The Dow Jones Industrial Average plunged over 600 points, roughly 3.4%, on the day. The large-cap S&P 500 Index closed down 3.6%, with nearly all ten of its major sectors finishing in negative territory. Meanwhile, the Nasdaq Composite Index posted a loss of more than 200 points or 4.1% on the day.

Implied volatility in the US equities market, as measured by the Chicago Board Options Exchange (CBOE) Volatility Index, surged 49% to reach nearly five-month highs. Gains of that magnitude were last seen during August’s “Black Monday” crash, which originated in China.

Commodities

The Brexit vote had major implications on the commodity markets. The rise in the US dollar triggered sharp declines in oil prices, with West Texas Intermediate (WTI) and Brent futures declining around 5% each. The move lower eroded an otherwise solid week of gains for oil prices.

Fear and panic selling in the equities market spurred demand for gold and silver, which are normally seen as a hedge against risks. Gold futures spiked above $1,300 for the first time since 2014. At one point, gold futures were up more than $100. Silver futures also advanced sharply and reached their highest level in 15 months.

Looking ahead

It’s difficult to predict with any certainty how the financial markets will react to Brexit in the short-term. A political battle is brewing within Britain’s Conservative party after David Cameron announced on Friday he would step down as Prime Minister by October. There is no timetable for when the British government will invoke Article 50 of the EU Treaty, which would kick start the devolution process. Mr. Cameron stated that he would attempt to “steady the ship” before stepping down, but noted that he would not be involved in negotiating Britain’s new trade agreement with the EU.[3]

[1] Javier E. David (June 26, 2016). “Brexit cost investors $2 trillion, the worst one day drop ever.” CNBC.

[2] Mariko Iwasaki (June 24, 2016). “Nikkei 225 Clocks Up 16-Year Record Decline.” The Street.

[3] Jane Onyanga-Omara and Kim Hjelmgaard (June 24, 2016). “U.K’s Cameron vows to ‘steady ship’ before stepping down.” USA Today.