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| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London close: Stocks still trying to find their footing London stocks took another hit, with traders for now largely ignoring attempts by George Osborne to reassure global investors, as financial markets continued to look for answers to the current uncertainty, both economic and political.
The FTSE 100 closed down by 158.40 points or 2.58% to 5,980.29, while the more UK-focused 250 index had fallen 1,107.76 points or 6.89% to 14,980.29, with financial services firms and real estate-related stocks bearing the brunt of selling at the sector level.
In parallel, the yield on the benchmark 10-year Gilt was pushed below the 1.0% mark for the first time ever.
Sterling was down 3.27% versus the dollar at 1.3220 by the closing bell, its lowest level since 1985, and down 2.55% on the euro at 1.2006.
Saying the Brexit result was "not the outcome that I wanted", Osborne said the Treasury and Bank of England were "ready to deal with the consequences" and retracted his recent warnings of an emergency budget.
The Chancellor said he favoured delaying triggering Article 50 - to start the process of leaving the EU - until it's clear what the terms would be in October when a new Prime Minister will have been chosen.
Market analyst Connor Campbell of SpreadEx commented: "Initially the FTSE had (relatively) held its ground, the index somewhat boosted by George Osborne's attempts to reassure the markets. However, it seems that the impact of the Chancellor's charms were short-lived."
Having earlier wondered if Friday's late rally "was a dead-cat bounce", Mike van Dulken at Accendo Markets said markets were struggling to digest Friday's Brexit vote and what it means for the UK outlook and that of London-listed equities and the pound.
"Weekend political upheaval from both sides and a leadership vacuum has done little to calm investor nerves about the near term future, with the most sensitive stocks to the Leave vote - banks, property, airlines - getting another drubbing which has in some cases wiped out the recoveries seen on Friday from knee-jerk Brexit lows," Van Dulken said.
Easyjet knocked sharply lower
Several brokers downgraded their ratings for the banking sector, with trading in Barclays and RBS temporarily halted at one point in the session following heavy share price falls.
Among the housebuilders, Berkeley Group and Taylor Wimpey also triggered circuit-breakers.
In company news, EasyJet led the fallers, declining by more than 10% after it warned that profits were lower than expected in the third quarter and that the UK decision to leave the EU was likely to mean revenues in the second half of the year will be lower than last year, while costs will be £25m higher due to oil and currency movements.
Following the Brexit vote, the budget airline predicted "additional economic and consumer uncertainty is likely this summer and as a consequence it is expected that revenue per seat at constant currency in the second half will now be down by at least a mid-single digit percentage" compared to the second half of 2015.
Estate agent Foxtons was down almost 24% after it warned full-year revenue and adjusted earnings will be "significantly lower" than the previous year due to uncertainty caused by the referendum.
In a trading statement ahead of the company's interim results on 29 July, it said the run-up to the EU referendum led to significant uncertainty across London residential markets and the decision to leave Europe is expected to prolong that uncertainty.
Aviva was also lower, despite trumpeting that its capital position was resilient to market stress, adding that Brexit will have no significant operational impact on the company.
Aviva said its Solvency II coverage ratio remained close to the top of its working range of 150% - 180% after the the UK's decision to leave the European Union. |
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| Market Movers
FTSE 100 (UKX) 5,980.29 -2.58%
FTSE 250 (MCX) 14,980.29 -6.89%
techMARK (TASX) 2,950.07 -3.21%
FTSE 100 - Risers
Randgold Resources Ltd. (RRS) 8,010.00p 8.68%
Fresnillo (FRES) 1,483.00p 7.00%
AstraZeneca (AZN) 4,115.00p 2.07%
Royal Dutch Shell 'B' (RDSB) 1,922.50p 2.07%
Diageo (DGE) 1,913.50p 1.89%
Royal Dutch Shell 'A' (RDSA) 1,903.50p 1.68%
Unilever (ULVR) 3,318.00p 1.61%
British American Tobacco (BATS) 4,452.00p 1.53%
Reckitt Benckiser Group (RB.) 6,998.00p 1.52%
National Grid (NG.) 996.90p 1.27%
FTSE 100 - Fallers
easyJet (EZJ) 1,020.00p -22.32%
Barratt Developments (BDEV) 355.00p -19.28%
Barclays (BARC) 127.20p -17.35%
Travis Perkins (TPK) 1,352.00p -16.54%
International Consolidated Airlines Group SA (CDI) (IAG) 343.90p -15.92%
Royal Bank of Scotland Group (RBS) 174.30p -15.10%
Associated British Foods (ABF) 2,361.00p -14.92%
Taylor Wimpey (TW.) 116.00p -14.77%
Capita (CPI) 848.50p -14.25%
Schroders (SDR) 2,048.00p -14.02%
FTSE 250 - Risers
Acacia Mining (ACA) 440.00p 10.00%
Centamin (DI) (CEY) 130.50p 8.48%
Polymetal International (POLY) 968.00p 5.10%
Genesis Emerging Markets Fund Ltd Ptg NPV (GSS) 516.00p 1.88%
Personal Assets Trust (PNL) 37,710.00p 1.10%
Synthomer (SYNT) 311.20p 0.74%
JPMorgan Emerging Markets Inv Trust (JMG) 596.50p 0.59%
Templeton Emerging Markets Inv Trust (TEM) 475.00p 0.42%
John Laing Infrastructure Fund Ltd (JLIF) 125.30p 0.40%
International Public Partnerships Ltd. (INPP) 149.10p 0.34%
FTSE 250 - Fallers
OneSavings Bank (OSB) 181.60p -31.06%
Shawbrook Group (SHAW) 167.00p -28.33%
Virgin Money Holdings (UK) (VM.) 205.20p -25.46%
Countryside Properties (CSP) 175.70p -20.61%
Supergroup (SGP) 1,185.00p -20.15%
Crest Nicholson Holdings (CRST) 345.00p -19.77%
McCarthy & Stone (MCS) 153.70p -19.53%
Aldermore Group (ALD) 114.00p -18.45%
DFS Furniture (DFS) 205.00p -18.29%
JRP Group (JRP) 96.00p -18.23% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Brexit continues to weigh on continental markets European stocks extended their losses on Monday, while the pound fell to a fresh 31-year low and gilts rallied further, as investors tried to gauge the impact of the UK's decision to leave the European Union.
The benchmark DJ Stoxx Europe 600 index was down 4.11%, Germany's DAX was 3.02% lower and France's CAC 40 was off 2.97%. The FTSE 100 was down 2.55%, with market participants pointing out that it is somewhat supported by a weaker pound, but the more domestically-focused FTSE 250 fared much worse, down 6.95%.
In Spain, the IBEX 35 reversed earlier gains to trade down 1.83% after acting Prime Minister Mariano Rajoy won the most votes in the country's repeat national elections on Sunday, although the People's Party fell short of a majority.
Over in Italy, the FTSE MIB was 3.94% lower amid reports the country was considering injecting as much as €40bn into some of its lenders following Brexit.
As investors looked for somewhere safe to park their cash, yields on benchmark 10-year gilts fell below 1% for the first time.
Meanwhile, the pound lost more ground against the dollar, sliding to a new 31-year low of $1.3120; as of 17:49 BST it was changing hands at 1.3210.
IG's Joshua Mahony said sterling was always likely to be the chief victim for sellers in the event of Brexit as it will suffer from capital outflows as money is moved to safer seas.
"The sheer extent of the uncertainty as to what Brexit really means for the UK economy and future company profits, combined with seismic changes in the political landscape is making it very difficult for investors to establish accurate fair-value levels for stocks, bonds and currencies," said Rebecca O'Keeffe, head of investment at Interactive Investor.
"The Spanish elections have provided some good news for European leaders as the fallout from the UK's referendum decision saw the Spanish election's equivalent flight to safety in increasing the number of seats for the conservative People's Party. However, the failure to reach an overall majority means an extension of the deadlock and challenges ahead to secure a working government."
George Osborne said on Monday that the UK was ready to face the future "from a position of strength", adding that there would be no immediate emergency Budget.
Looking to calm financial markets in his first public address since the referendum results, the Chancellor said in a statement: "Growth has been robust and employment is at a record high. Our economy is now about as strong as it could be to confront the challenge the country now faces."
After the result of the EU referendum, the Bank of England said it stood ready to provide £250bn of additional funds to support the UK's banks.
In corporate news, budget airline EasyJet tanked after warning that Britain's vote to leave the European Union will dent sales in the second half of the year and reduce third-quarter pre-tax profit by around £28m.
Swedish truck maker Volvo was also sharply lower after it said it increased its provision for a possible European Commission fine by more than 60%.
The stoxx 600 banks index was down 7.7% and trading in RBS and Barclays was automatically halted in London at one point during the session after their share prices fell by over 10%. Housebuilders were also under the cosh, but defensive stocks did well with Diageo, AstraZeneca, United Utilities, Unilever and Reckitt Benckiser all posting healthy gains. |
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| | US Market Report | | US open: Stocks slide on Brexit fears; dollar gains more ground US stocks opened in the red on Monday, taking their cue from heavy losses in Europe as investors continued to worry about the impact of Britain's decision to leave the European Union.
At 1500 BST, the Dow Jones Industrial Average was down 1.2% or 207 points, the S&P 500 was 1.3% or 25 points lower and the Nasdaq was off 1.4% or 67 points.
Joshua Mahony, market analyst at IG, said: "There is little doubt that global monetary policy will have to adjust to this historic decision and with markets now pricing in a 50% chance of a July rate cut from the BoE, the idea of a rate hike appears dead in the water. Elsewhere, Friday's flight to safety saw USDJPY hit a 31 month low, driving easing expectations from the BoJ higher once more."
George Osborne said on Monday that the UK was ready to face the future "from a position of strength", adding that there would be no immediate emergency Budget.
Looking to calm financial markets in his first public address since the referendum results, the Chancellor said in a statement: "Growth has been robust and employment is at a record high. Our economy is now about as strong as it could be to confront the challenge the country now faces."
After the result of the EU referendum, the Bank of England said it stood ready to provide £250bn of additional funds to support the UK's banks.
In currency markets, the dollar was enjoying further gains on Monday as the pound slid to a fresh 31-year low against the greenback of $1.3224 - below Friday's $1.3230.
Societe Generale strategist Kit Juckes said: "The extent of the uncertainty that now clouds the UK's economic and political outlook is hard to exaggerate. The government is in limbo ahead of a Conservative Party leadership contest. The opposition is in chaos. The rest of the EU would like negotiations on the UK's exit to begin but they have no-one to negotiate with.
"Uncertainty is negative for the UK economy, for investor confidence and obviously, for the pound. Sterling has now fallen by 9% against the US dollar since the eve of the UK referendum, and we look for an eventual move in GBP/USD to 1.20- 1.25."
Bank stocks suffered the brunt of the losses; Bank of America was down 12%, JPMorgan was 3.9% weaker and Citigroup was off 2.6%.
On the data front, figures from Markit showed activity in the US services sector was unchanged this month, missing economists' expectations.
Markit's flash US services purchasing managers' index came in at 51.3, undershooting estimates of 51.9. A reading above 50 indicates expansion.
Markit's chief economist Chris Williamson said: "The survey data indicate that any rebound in the economy from the weak first quarter was largely confined to April, and that growth has since faded again. The June PMIs, which provide the first insight into national business activity in the second quarter, suggest the underlying rate of growth in the economy is only a meagre 1%."
Oil prices were back in the red, with West Texas Intermediate down 2% at $46.67 a barrel and Brent crude 1.9% lower at $47.50. |
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| | Broker Tips | | Broker tips: ITV, Randgold Resources, Fresnillo, UK banks Nothing had changed with respect to ITV's fundamentals following Brexit despite the approximately 20% share price drop on 24 July, analysts at Liberum said, as they stood by their 'buy' recommendation and 375p target on the stock and singled it out as a 'top-pick'.
That was true even assuming a decline in advertising revenues of post-Lehman proportions, analysts Ian Whittaker, Ciaran Donnelly ad Annick Maas said in a research note sent to clients and dated 27 June.
The shares were offering a "very attractive" dividend yield to boot, the analysts said.
Furthermore, the 10.5% drop in the value of sterling against the US dollar - combined with the fall in the price of the company's stock - meant increased chances a bid from one of the major US media companies might soon surface.
Precious metals miners Randgold Resources and Fresnillo were among the few gainers in equity markets on Monday again as gold prices hit a two-year high, supported by upgrades from Goldman Sachs.
Goldman said in a note that it has lifted its gold price forecast for the second half of this year by 10% to $1,300 an ounce and for 2017/18 by 20% to $1,250 an ounce.
The bank's commodities team argued that with the UK leaving the EU, there could be a 2% cut to the UK's GDP and a 50 basis points cut to EU-area growth.
"Lower growth would likely see US rate expectations decline and gold outperform. Further, they argue that the uncertainty created by the vote, and the potential threat of contagion, will make commodities (including gold) trade away from their fundamentals. As a risk asset gold is likely to be supported by this."
Banks in London took another beating on Monday as investors mulled over the implications of the UK's decision to leave the European Union, with ratings downgrades across the board.
Societe Generale was among those issuing downgrades. It cut its stance on Royal Bank of Scotland to 'sell' from 'hold' and chopped the price target to 200p from 260p saying its lower level of profitability gives it less scope to absorb bumps in the road.
It kept its 'buy' recommendations on Lloyds, Barclays and HSBC, but slashed the price targets. It kept its 'hold' recommendation and 575p price target on Standard Chartered as its focus on Asia, Africa and the Middle East means it's more insulated from the Brexit fallout. | | |
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