As the Brexit referendum results triggered a global risk-off event, exchange traded funds (ETFs) that track safe-haven plays surged on the increased volatility.
For instance, gold jumped the most since the 2008 financial downturn as traders turned to the Brexit haven, Bloomberg reports.
Gold futures jumped as much as 8.1% on three times the average daily volume in the immediate aftermath of the vote results. Comex gold futures, though, were up 4.7% to $1,322 per ounce late Friday.
The SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU) and ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) all gained close to 5% Friday.
Related: Safe-Haven ETFs for a Rocky Summer
“We’re still seeing strong volumes across the precious metals space, which should be expected based on risk-off positioning by investors,” Maxwell Gold, a director of investment strategy at ETF Securities, told Bloomberg.
The bounce in gold is also lifting gold miners the VanEck Vectors Gold Miners ETF (NYSEArca: GDX) and the VanEck Vectors Gold Miners ETF (NYSEArca: GDXJ), the two largest gold miners ETFs, up 6.5% and 5.8%, respectively. Additionally, more aggressive traders capitalized off the surge with the Direxion Daily Gold Miners Bull 3X Shares (NYSEArca: NUGT) and the Direxion Daily Junior Gold Miners Index Bull 3X Shares (NYSEArca: JNUG), which rose 19.3% and 16.9%, respectively.
[related_stories]U.S. Treasury bonds also jumped as investors sought to safeguard their wealth and play a potentially dovish Federal Reserve outlook in the wake of the increased uncertainty. Yields plunged across maturities as demand rose for U.S. government debt, with benchmark 10-year Treasury notes yielding 1.58%.
“The Fed is on indefinite hold – it’s an infinite extension,” James Camp, director of fixed-income with Eagle Asset Management, told Bloomberg. “We will see Treasuries continue to stampede to 1.25 percent, maybe 1 percent. It may happen over the next quarter. We’ve got a massively dislocating moment, and what are central bankers going to do, and do they have any bullets left?”
Long-term Treasury ETFs outperformed Friday, with the iShares 20+ Year Treasury Bond ETF (NYSEArca: TLT) up 2.6%, PIMCO 25+ Year Zero Coupon US Treasury (NYSEArca: ZROZ) 3.7% higher and Vanguard Extended Duration Treasury ETF (NYSEArca: EDV) up 3.6%.
In the currency market, the Japanese yen strengthened on safe-haven demand, with the USD trading as low as JPY99.99. Meanwhile, the CurrencyShares Japanese Yen Trust (NYSEArca: FXY) gained 3.5% Friday.
Lastly, the CBOE Volatility Index bounced on the mounting market fear. The VIX surged 43.5% to 24.8. Meanwhile, the REX VolMAXX Long VIX Weekly Futures Strategy ETF (BATS: VMAX) gained 30.0%, iPath S&P 500 VIX Short Term Futures ETN (NYSEArca: VXX) rose 24.7% and ProShares VIX Short-Term Futures ETF (NYSEArca: VIXY) increased 24.8%, with the VIX now hovering around 20.9, its highest level since February.
Related: VIX, Bearish S&P 500 ETFs to Hedge Uncertainty
“They’re a very easy way to hedge a portfolio that might be net long,” Matt Lloyd, chief investment strategist at Advisors Asset Management, told Bloomberg.
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