Brexit Impact: ‘Uncertainty’ and a Positive for REITs

Trading at the New York Stock Exchange opened smoothly on Friday, according to Intercontinental Exchange Inc., although stocks were down sharply. (Photo: Wikimedia Commons)

NEW YORK CITY—The immediate response to the outcome of Thursday’s UK referendum on membership in the European Union was not positive, although the actual secession from the EU is still months away. Trepp LLC reported early Friday morning that as the results of the vote became clear overnight, 10-year Treasury yields fell 25 basis points and European stocks were off by 5% to 10%.

“A period of uncertainty is inevitable for the UK with the focus on political stability in the light of Prime Minister David Cameron’s announcement that he will step down from office before the end of 2016,” Amsterdam-based trade credit insurer Atradius said in a report Friday morning. Among other effects, British GDP is expected to decline by 1% to 3% over the next two years. “The structure of trade agreements over the coming two years will determine the longer-term impact,” according to Atradius. The UK has been a member of what is now the EU since 1973.