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Global markets take a pounding after Brexit bombshell

There has been widespread shock within financial markets following the news that Britain is leaving the EU.

Picture: Facebook.

JOHANNESBURG/NEW YORK - Global markets have taken a pounding due to the Brexit, with the JSE closing more than 3,5 percent down.

The local markets joined Wall Street and others in experiencing sharp losses.

The sterling also saw its biggest drop against the dollar, while the rand also lost value to the US currency.

The rand is now 15.07 to the dollar, 20.61 to the pound and 16.72 to the euro.

WALL STREET

Wall Street suffered its largest selloff in 10 months after Britain's decision to leave the European Union caught traders wrong-footed.

In the busiest trading volume for a single session in nearly five years, financial stocks .SPSY led the decline on the S&P 500 with a 5.4 percent drop -the largest for the sector since November 2011.

The S&P 500 lost all the year's gains and suffered its largest decline since late August last year.

Equity futures neared an 11-month high to start the overnight session as markets wrongly bet that the "Remain" camp would prevail in Britain's referendum, but sold off sharply as the results showed otherwise - even triggering a market stop put in place to curtail volatility.

The decline during regular market hours seemed more orderly, and the S&P managed to close in the area of what analysts called significant technical support, near 2,040.

Still, many expect the next weeks to remain volatile.

The CBOE Volatility index .VIX ended up 49 percent at 25.76, its highest level since Feb. 11 - when equities hit their lows of the year.

"The market has really not fully digested the second-order impacts of this," said Stephen Auth, chief investment officer at Federated Investors in New York.

"We are keeping our clients in dividend stocks and on a defensive strategy," he said. "That's the story until we reach better risk-reward levels," which Auth said could be near the S&P 500's February low near 1,830.

High-dividend-paying utilities .SPLRCU were the only S&P 500 sector to end the day in the black, with a meager 0.09 percent gain.

The Dow Jones industrial average .DJI fell 611.21 points, or 3.39 percent, to 17,399.86, the S&P 500 .SPX lost 76.02 points, or 3.6 percent, to 2,037.3, and the Nasdaq Composite .IXIC dropped 202.06 points, or 4.12 percent, to 4,707.98.

Many market participants, however, saw the broad-based decline as an opportunity for investors on the sidelines to gradually increase their stock holdings.

Additional reporting by Reuters.