Consumer-focused stocks took a major hit as experts scrambled to try to understand how confidence will be impacted in the aftermath of the UK's decision to leave the EU.
Bicycle retailer Halfords (HFD) dropped 22 per cent in early trading whlie Restaurant Group (RTN), a stock which had already been under pressure, fell up to 30 per cent before regaining some ground.
In terms of the airlines, Easyjet (EZJ) is down 17 per cent and Ryanair (RYA) has dropped 10 per cent on fears the pound's large drop could put some holidaymakers off. British Airways owner International Consolidated Airlines (IAG) has also said this morning the vote to leave means it expects the pace of profit growth to slow this year. The shares are down 20 per cent at the time of writing.
"Following the outcome of the referendum, and given current market volatility, while IAG continues to expect a significant increase in operating profit this year, it no longer expects to generate an absolute operating profit increase similar to 2015," the group said.
The British Retail Consortium's chief executive Helen Dickinson, said: "Keeping the cost of goods down for consumers and providing certainty for businesses must be at the heart of the Government’s plans for life outside of the EU."
The body added that without clarity, "retailers, other businesses and hence the economy will suffer from a prolonged period of uncertainty".
Ms Dickinson added retailers should be "prepared for the possibility of significant swings, particularly in the exchange rate and consumer confidence".
Chris White, head of UK equities at Premier Asset Management, said it was likely defensive stocks and multinationals would come to the fore while "financials and both consumer and industrial cyclicals will come under pressure”.
And broker RBC said the impact of imported inflation as a result of the pound's fall could lead to price rises from spring 2017, which he said "may be difficult to pass on in what’s been a promotional deflationary environment recently".
"We see a risk that like-for-like volumes will reduce more, given spend on clothing has been underperforming other bigger ticket and leisure related parts of consumer spending," the broker said.
"Assuming that retailers raise prices we see a risk of a more intense promotional environment, particularly as increased online competition, Black Friday week promotions and internet price transparency for consumers have all led to recent net price deflation in the sector."
But RBC said several consumer staples stocks it covers should be relatively unaffected given the low amount of revenues they derive from the UK.
One stock it follows, it added, could even be a beneficiary - Diageo (DGE).
"That’s because 24 per cent of its sales are of Scotch, with production and storage costs incurred in the UK – so these costs should come down," it said.
"But only 6 per cent of sales are in the UK. So Diageo, and to a lesser extent Pernod Ricard, should see a meaningful transactional benefit.
"At the other end of the scale is Britvic (BVIC), where we estimate about two-thirds of sales are in the UK – so it will likely be significantly more affected than the rest of the staples sector."
Read all our Brexit reaction:
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Consumer confidence could see 'significant swings'
