At the start of the week, most global stock markets are down, but they don’t look as bad as they did on Friday, the day after Britain voted to leave the European Union.
Then again, how could they? Friday, June 24 was the worst day ever for global stock markets, in terms of total value destroyed. According to Standard & Poor’s, more than $2 trillion was wiped off the value of stocks that day, surpassing the turmoil in the wake of Lehman Brothers’ bankruptcy:
These figures are derived from the S&P Global Broad Market Index, which tracks some $40 trillion in stocks across nearly 50 markets. Friday’s plunge wasn’t the worst ever in percentage terms—the 4.7% decline was relatively mild compared with previous trillion-dollar days. For example, the previous record holder—Sept. 29, 2008, the day when the US Congress rejected a proposed bank bailout—came as a result of a 6.6% decline.
But the general upward trajectory of markets over time means that smaller percentage moves now generate larger absolute changes. To date, there have been 22 days when more than $1 trillion was wiped off global stocks, according to S&P.
According to many forecasters, things will probably get worse before they get better. “Hello, recession” was the cheery title of a research note from Bank of America-Merrill Lynch after Brexit. The pound continues to plunge, Britain’s political turmoil shows no signs of letting up, and the country’s post-Brexit plan is murky, at best.
That said, shrewd traders can make money on the way down as readily as when assets are rising. As analysts at brokerage Liberum put it in a note morning: “We think there is likely to be opportunity lurking in the rubble.”