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And after the U.K. voted to leave the European Union, stocks plunged from New York to Tokyo. Today, a little more than five weeks later, in much of the world, it's almost as if it didn't happen. The Dow, for instance, is up more than 400 points since U.K. voters went to the polls. What is behind the Brexit rebound? NPR's Frank Langfitt explains from London.
FRANK LANGFITT, BYLINE: In the days following the Brexit vote, some TV newscasts went into financial Armageddon mode.
(SOUNDBITE OF NEWS MONTAGE)
UNIDENTIFIED WOMAN #1: The pound hits a new 31-year low as Brexit fears grip the markets. British bank shares plummet.
UNIDENTIFIED WOMAN #2: The Dow's implied to open 700 points lower. And European Futures, they point to triple-digit losses.
UNIDENTIFIED WOMAN #3: Over in Japan, it's safe to say this is a market that was completely caught off guard.
UNIDENTIFIED MAN #1: European equity...
LANGFITT: But soon after the shock, there was a sense of Brexit shmexit (ph).
KRISHNA GUHA: Markets, as I think you know, have recovered quite well, almost surprisingly well, since the initial sell-off.
LANGFITT: Krishna Guha is vice chairman of Evercore ISI. That's a broker dealer with offices around the globe. He says initially, people worried the U.K. vote might encourage other countries to bolt the EU. Guha spoke by Skype.
GUHA: In the immediate aftermath of the vote, a lot of investors were concerned about the domino effect. The question that I was being asked by lots of clients is, who's next? Is it going to be the Dutch? Is it going to be the Finns?
LANGFITT: But, Guha says, markets calmed down when other countries didn't follow suit. He thinks one reason is people elsewhere were frightened by the political chaos and financial losses they saw here.
GUHA: To see the U.K., at least initially, in a state of complete disarray following this vote was obviously sort of caution, a caution to others in Europe. Are you sure you want to take a, you know, a similar gamble yourself?
LANGFITT: Jim Meyer says markets also rebounded because already low interest rates fell even lower. On expectations, global growth would slide. Meyer's chief investment officer at Tower Bridge Advisors in Conshohocken, Pa.
JIM MEYER: When interest rates go down, the yields on stocks look more and more attractive. And what happens is people go out and buy those stocks, driving the prices up.
LANGFITT: That's what the bosses of some of Britain's hardest hit companies did. After stock prices fell, they spent more than $20 million snapping up the shares of their own companies at bargain prices, according to the Financial Times. Despite the Brexit vote, some people still think the U.K. may not really go through with it. There's some talk of a Brexit light, which would still give the U.K. a lot of access to the EU's massive market. Again, here's Jim Meyer.
MEYER: I think this is something that, you know, level heads will prevail. Nobody wants to do economic harm to the entire EU community, including Great Britain.
LANGFITT: Guha, of Evercore ISI, says many investors see it this way, but that may turn out to be wishful thinking.
GUHA: I suspect that if in the period ahead it becomes clear that the sort of harder version of Brexit, a more complete rupture, looks like it's a tangible possibility, then markets could very easily turn sour on this again.
LANGFITT: And that means stocks and investors could be in for a lot more financial pain. Frank Langfitt, NPR News, London. Transcript provided by NPR, Copyright NPR.