The shockwaves sparked by last week’s vote by the UK to leave the European Union continued to roll through global financial markets Monday but the impact faded as the day progressed. The new week kicked off with another round of selling pressure against risk markets but into the US afternoon, many markets stabilized. The FTSE, for example, stabilized near the 6,000 level down 2.5%, less than the 3.0% decline in the Dax. Spain’s IBEX fell 1.8% cushioned by election results that showed Euroskeptic parties spinning their wheels at best while the incumbents returned with more seats. In US trading, the Dow fell 1.5%, the S&P 1.9 % and the technology heavy NASDAQ fell 2.3%. Financials plunged again in the UK falling the most along with Consumer Discretionary and Industrials. In the US a combination of Energy, Materials, Financials and Technology took the biggest drops, Within stocks defensive areas like Utilities and Telecom outperformed. Crude oil continued to tumble today with WTI and Brent falling 3.5% as traders try to figure out what Brexit uncertainty may mean for global demand prospects. Throughout the campaign, credit agencies dangled the threat of a downgrade over the British public. Today Standard and Poors and Fitch kept their promises each downgrading the UK by a whole notch. In response to this momentous event, UK markets (FTSE and GBP) did…absolutely nothing. England losing to Iceland in Football appears to have been a much bigger deal. This suggests that market weakness earlier in the day had already priced in many of the negative impacts of the result. Based on this, is appears market prices have realigned to price in the potential for Brexit negotiations and we could be approaching the washout phase of the current selloff. On the political side, cooler heads appear to be prevailing for now as well. Despite calls from unelected officials and third parties, elected politicians appear willing to take some time to get a Brexit divorce right. PM Cameron ruled out a second referendum, indicated no decisions will be made until a new PM comes in and moved up the date by a month for finding a replacement to early September. UK finance minister Osborne, meanwhile backed away from his campaign threat to bring in an emergency austerity budget while German Chancellor appeared willing to give the UK some time to get organized for negotiations. In currency action, GBP started the week weak but has stabilized. JPY has started to drop back relative to other majors like USD and EUR. CAD and NOK fell with oil but posted declines similar to other majors. AUD and NZD have been weakening overnight in what may be catch up trading as yesterday’s Asia Pacific trading bounce failed to carry through into other markets. This suggests we could see some trading weakness and volatility in Asia Pacific stock markets again as traders continue to focus on the impact of last week’s events with no major news due today. Corporate News There have been no major corporate announcements after the close today. Economic News Significant announcements released overnight include: Standard and Poors downgraded the UK to AA from AAA, negative outlook Fitch Ratings downgraded the UK to AA from AA+, negative outlook US advance goods trade balance ($60.6B) vs street ($59.4B) US Markit flash service PMI 51.3 vs street 51.9 US Dallas Fed (18.3) vs street (15.0) vs previous (20.8) Upcoming significant economic announcements include: (Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore) 8:00 am BST Spain retail sales previous 6.4% 8:30 am BST Sweden retail sales street 3.2% 9:30 am BST ECB Draghi speaking 8:30 am EDT US Q1 GDP update street 1.0% vs previous 0.8% 8:30 am EDT US Q1 personal consumption street 2.0% 8:30 am EDT US Q1 core PCE inflation street 2.1% 10:00 am EDT US consumer confidence street 93.5 10:00 am EDT US Richmond Fed street 3