Markets Are Freaking Out About Brexit

June 24, 2016, 3:53 AM UTC
Leave.EU supporters wave Union flags and cheer as the results come in at the Leave.EU referendum party at Millbank Tower in central London early in the morning of June 24, 2016. First results from Britain's knife-edge referendum showed unexpectedly strong support for leaving the European Union on Friday, sending the pound plummeting as investors feared a historic blow against the 28-nation alliance. / AFP / GEOFF CADDICK (Photo credit should read GEOFF CADDICK/AFP/Getty Images)
Photograph by Geoff Caddick — AFP/Getty Images

The dollar is surging around the world as investors and speculators seek a ‘safe haven’ as the U.K. lurches towards the European Union’s exit door.

The pound is naturally the biggest loser, falling more than 15 cents–more than 9%–overnight against the greenback–and U.K. stock futures are tipped to open down over 6% according to Reuters. At $1.34, the pound has gone from a new high for 2016 to its lowest level since 1985 in the small space of 5 hours.

But the sense of panic has spread beyond the U.K. as the results of the vote ripple through global markets. U.S. stock futures are indicated over 3% lower. The euro is also down over 3% against the dollar, as traders price in a potentially catastrophic shock to the European Union and its already-stressed single currency project. The Japanese yen, another ‘safe haven’ asset beloved of traders, has also strengthened sharply against all currencies including the dollar, in a move that will deal another blow to Japan’s fragile recovery. Crude oil futures, meanwhile, are down 4.5% at below $48 a barrel.

With over two thirds of the 382 voting districts having announced their results, the Leave campaign is winning by over 700,000 votes, more than 3% ahead of the Remain camp. That’s a commanding lead that can only realistically be overturned if the remaining cities in England vote far more heavily in favor of remaining than those that have already reported.

European financial markets will open in less than three hours, and a wave of volatility is almost inevitable. A source close to the European Central Bank told Fortune last week that its market division is expecting a 15% drop in the pound on the day after a Leave vote. The Bank of England, which warned against a Leave vote, has said it will guarantee financial stability if it has to, but the U.K. has traditionally rejected any attempts to massage its exchange rate since its traumatic exit from, the E.U.’s Exchange Rate Mechanism in 1992.