US Stock Futures Set Up for Freefall as U.K. Votes for 'Brexit'

New York (Jun 24)  A vote for a 'Brexit' blindsided world markets on Friday morning after days of growing confidence that the United Kingdom would opt to remain in the European Union.

U.S. stock futures were setting up for heavy losses in premarket trading. S&P 500 futures were down 3.8%, Dow Jones Industrial Average futures fell 3%, and Nasdaq futures declined 3.7%.

The U.K. referendum resulted in victory for the "leave" campaign with 51.8% support. The results could have major political and economic implications for the region over the next two years and beyond as the country negotiates how exactly it will separate from the 28-nation bloc.

Those arguing to leave the European Union had argued that unelected E.U. officials held too much power over Great Britain, particularly in key issues such as immigration. Those wanting to remain believed to stay in the E.U. would provide greater protection, more political power in global events, and greater economic strength.

Prime Minister David Cameron, a supporter of the "Remain" camp, has announced his resignation. His successor will determine how to extricate the U.K. from the E.U. over the next two years.

"We believe that 'Brexit' is a macro shock to the global economy and the ramifications to the U.S. are unambiguously negative," TD Securities wrote in a note. "We expect the [Federal Reserve] to take the tightening in financial conditions into account and that should push the trajectory of hikes further out."

European stock markets were in sharp decline. Germany's DAX tanked more than 7%, the CAC 40 in France fell 6.7%, and the FTSE 100 in London declined 4.5%.

New York Early Trading Openings at 8:09am EST:

Dow Index -540 ay 17374

S&P500 -80 at 2026

NASDAQ -168 at 4296

Source: TheStreet