Selloff in equities on Brexit continued with DJIA losing -260.51 pts, or -1.5%, to close at 17140.24 overnight. S&P 500 also dropped -36.87 pts, or -1.81%, to close at 2000.54. Flight to safe assets also continued as 10 year US yield dropped sharply to 1.46, down from Friday's close of 1.58. Gold stayed firm at around 1330 for the moment while WTI crude oil recovered some ground and is back above 46.5. In the currency markets, Sterling's selloff continued by hitting new low against Dollar and Euro. Yen strengthened broadly but momentum is somewhat limited as markets are cautious on possible move by BoJ to slow down the steep rally in the Japanese currency.
S&P Global Ratings lowered UK's credit rating by 2 notches to AA, down from AAA, with a negative outlook. The rating agency noted that the downgrade reflected the uncertainty over stability in UK and "the risks of a marked deterioration of external financing conditions". Also, "economic prospects, fiscal and external performance, and the role of sterling as a reserve currency, as well as risks to the constitutional and economic integrity of the U.K. if there is another referendum on Scottish independence." Moody's Investors service lowered outlook on UK's rating to negative last Friday.
In Europe, German Chancellor Angela Merkel held a meeting with French President Francois Hollande and Italian Prime Minister Matteo Renzi in Berlin. Merkel called the result of UK's referendum a "very painful and regrettable decision" but "there can't be any furthers steps" until Article 50 of the European treaties is called. And she emphasized that "there will be neither informal nor formal talks on a British exit until the European Council has received the request for an exit from the European Union." In UK, prime minister David Cameron said that it would be up to his successor to decide "what kind of of relationship we want with the EU" to start the negotiations. ECB president Mario Draghi said that "sadness is the best word for what we feel when we witness changes of this magnitude."
There will be a session in the European parliament today on Brexit in Brussels. There is also an EU summit where David Cameron will brief other EU leaders over the issue. Meanwhile, 27 EU leaders, without Cameron, will have the second day of EU summit tomorrow with talks on the "divorce process" and European council Donald Tusk will "launch a wider reflection on the future of the EU".