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Markets tank following Brexit vote

Markets tank following Brexit vote
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The U.S. stock market is in freefall Friday after voters in Britain stunned the world and chose to leave the European Union.

The Dow Jones Industrial Average opened trading down nearly 500 points in the first minutes of trading, one of the steepest collapses since the financial crisis. The NASDAQ and S&P 500 were also down by large amounts early on.

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News late Thursday that Britain would be making an unprecedented exit from the 28-nation governing partnership rocked financial markets across the globe as investors tried to processed the political and economic turmoil to come. British Prime Minister David Cameron has already announced his plans to resign after the vote.

Finance officials from across the world issued statements Friday morning in an attempt to calm markets.

In a joint statement, the finance ministers and central bank governors of the G-7, which includes the U.S. and Britain, said they would be monitoring financial markets closely and doing what they can to support them.

“G7 central banks have taken steps to ensure adequate liquidity and to support the functioning of markets. We stand ready to use the established liquidity instruments to that end,” the statement read.

In a separate statement, the Federal Reserve said it was “carefully monitoring” financial markets and is prepared to provide dollar liquidity to other central banks if necessary. It noted that “pressures in global funding markets” could lead to “adverse implications for the U.S. economy.”

Christine Lagarde, the managing director of the International Monetary Fund, called for a “smooth transition as Britain made its exit” and will “stand ready to support our members as needed.”

Fed Chairwoman Janet Yellen told lawmakers earlier this week that a British vote to leave could carry “significant economic repercussions.” The Fed opted not to raise interest rates earlier this month, in part due to uncertainty about the British vote.

One of the lingering concerns is that if Brexit turmoil hits the U.S. economy in a major way, the Fed has little by way of traditional tools to combat it. The central bank is still trying to dig out from the intense stimulus it pumped into the economy after the 2008 crisis, with interest rates at just 0.25 to 0.5 percent currently.

Meanwhile, President Obama warned in April that if Britain left the EU, it could complicate the trade status between the two nations. He noted that America was trying to hammer out a new trade deal with the entire EU, and negotiating one with Britain alone could take years.