The FTSE 100 opened down 0.8% in the second day of trading following the Brexit vote decision while 10-year gilt yields have fallen to an historic 1%, as Chancellor Osborne moved to reassure markets with an early morning statement saying the UK was "open for business".
The FTSE 100 was trading at 6,090 this morning, down 0.8%, with the biggest fallers including easyJet which fell 8% and Barclays 6% lower.
Commodities were the biggest risers with AngloAmerican, Randgold Resources and Rio Tinto all up more than 1.5%.
However, the FTSE 250 is 2% lower this morning after suffering its worst ever trading day on Friday, when it fell 7% with banks and housebuilders among the worst victims.
Meanwhile, 10-year gilt yields have fallen to 1% for the first time ever in their history as investors seek the safety of government bonds.
Futures markets had predicted an opening fall of 3% today for the FTSE 100 but Chancellor George Osborne managed to calm markets in a speech earlier this morning, his first comments since the referendum decision on Friday.
The Chancellor said the UK economy was "about as strong as it could be to face the challenges ahead" and "open for business".
He stressed contingency plans were in place with the Bank of England to support banks and the smooth functioning of markets and the UK was "open for business".
Osborne added the UK has "dealt with the immediate challenge of an unexpected vote as far as financial markets are concerned".
However, he identified a number of challenges ahead and said it is evident some firms continue to pause decisions to invest or hire. "This will have an impact on the economy and public finances," he added.
The Chancellor said he "intends to play an active role" in trade negotiations with Europe and the rest of the world, but would address his own role in the Conservative Party coming days.
He also said it is sensible to wait for a new Prime Minister to be in place and the OBR's report on the UK economy and the Brexit impact in the autumn before deciding on any Emergency Budget.
Osborne had previously said during the referendum campaign this would be necessary if the UK voted to leave the EU.
Sterling was 1.7% lower at $1.3445 after Mr Osborne left the stage, having been down about 2% before he started speaking.
Meanwhile, the 10-year UK gilt yield is down two basis points to 1.07% after falling to record lows on Friday.
European markets will also be the focus of attention today with the German Dax and French CAC 40 up marginally in early trading after significant falls last Friday. Asian markets were also up overnight with Japan's Topix up 1.2%, despite a stronger yen, and Hong Kong's Hang Seng up 0.7%.
The FTSE 100 plummeted 8% on opening last Friday as investors digested news of the Brexit vote, although it rebounded later in the day to close 3% lower and was actually 1.9% for the week. Sectors particularly badly hit included financials and property.
Unsurprisingly, the more domestically-focused FTSE 250 took an even bigger hit, suffering its worst ever trading day on Friday. It slumped 12% on opening to close down 7% for the day, with banks and housebuilders among the worst victims.
