Do not invest more money than you can afford to lose.
Against the background of the shocking results of UK’s referendum on the EU which caused a dramatic plunge of global markets, some financial analysts were delighted. One such is Saxo Bank’s chief economist Steen Jakobsen who noted this is “the best day for the markets in 20 years”.
He further explains that the jolt is good for the asset valuations who could not continue to rise in the low-growth, low-inflation, low-energy environment Jakobsen calls “the new nothingness”.
He also predicted that the Bank of England will cut interest rates by midday on Friday and there will be an intervention from the European Central Bank (ECB).
Indeed, Bank of England Governor Mark Carney said on Friday the central bank was ready to provide 250 billion pounds of additional funds to support financial markets after Britain voted to leave the European Union and will discuss additional measures in the coming days. The ECB also issued a statement that it will provide additional liquidity to protect the financial world and is working closely with other central banks.
Meanwhile, Saxo Bank’s Head of Markets Claus Nielsen said the broker’s clients gained from the market volatility, thanks to the measures taken prior to the referendum. We remind you that Saxo Bank was among the first major forex brokers to announce it is hiking margin requirements on select instruments.
“This has proved to be the right decision as our numbers show gains for our clients despite the volatility in both FX markets and Asian equity markets,” Nielsen said. “The German DAX index was down 10 % at open and we expect further volatility on European stock markets today and continue to recommend clients to be cautious in this environment.”
He also added that prudence was the right decision, the current margins are appropriate and the broker is continuing to monitor volatility closely.