More volatility in financial markets likely this week

WITH its epicentre in Britain, the biggest "earthquake" since the failure of Lehman Brothers hit financial markets last Friday and there are likely to be after-shocks aplenty this week.

Traders woke up to a new European order on Friday, discovering that the United Kingdom was quitting the European Union. The blue-chip Dow Jones Industrial Average suffered one of its biggest point losses since the Great Recession, falling by more than 600 points. Volatility spilled into the stock market from foreign-exchange markets where sterling fell more than 7 per cent against the dollar.

Forex traders had laid billions of dollars in bets that Prime Minister David Cameron would quell the revolt in the Conservative Party, wagers that proved almost as woefully miscalculated as the referendum itself. Mr Cameron had attempted to put an end to divisions in the Conservative Party over EU membership by calling the vote. Instead, he put an end to nearly 50 years of British participation - albeit sometimes half-hearted - in the "European project", and to his term as prime minister.