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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 close lower as pound hammered by Brexit The FTSE 100 finished in the red on Wednesday as the pound plunged against the dollar on growing Brexit fears.
The pound fell 1.02% to $1.2889, a level not seen since 1985, highlighting the negative impact of Britain's vote to leave the European Union on 23 June.
"In a world where around $10 trillion of global government credit has yields at or below zero, it is clear that investors are desperately seeking for safety wherever it can be found," said IG market analyst Joshua Mahoney.
"Today's 27-month high in gold and Monday's near two-year high for silver highlights the underlying rush to havens in an increasingly uncertain future."
Mining stocks, including Randgold Resoruces and Fresnillo, rallied on the increase in silver and gold prices as investors sought out perceived safe-haven assets in the wake of Brexit.
Heading in the other direction, supermarkets Tesco, Morrisons and Marks & Spencer moved lower after shop price data from BRC-Neilsen showed deflation decreased to -2% in June, raising the prospect of further erosion of profit margins.
Life insurance stocks were also under pressure after Aviva, Standard Life and Prudential stopped trading in their property portfolios due to risks following Brexit.
In economic data, Germany factory orders unexpectedly fell in May. Orders dropped 0.2% year-on-year, compared to forecasts for a 0.9% rise and the previous month's 0.4% decline.
Markit's purchasing managers index on eurozone retail fell to 48.5 in June from 50.6 in May, signalling a contraction in sector activity. The report blamed the contraction on a sharp drop in sales in Italy.
Stateside, services data came in better than expected.
Markit's US services PMI was unexpectedly revised higher to 51.4 in June from a previous estimate of 51.3. It compared to a reading of 51.3 in May.
The Institute for Supply Management´s PMI on services rose to 56.5 in June from 52.9 in June, beating estimates of 53.3.
The US trade deficit in goods and services worsened by 10.1% month-on-month to $41.1bn in May as exports fell, according to the Department of Commerce, its highest since August 2015. Economists had been expecting a gap of $40.0bn.
Still to come, the Federal Reserve releases the minutes of its 15 June policy meeting at 1900 BST. The central bank decided to keep interest rates unchanged last month after a weak May job report and amid uncertainty leading up to the 23 June European referendum.
While the Fed's stance on interest rates may have changed since Brexit, the minutes will reveal more details behind the decided to leave policy on hold.
"The Fed is now unlikely to consider rate hikes in the coming months as it analyses the impact of Brexit but the minutes could still provide insight into how close they were to raising and how much of a deterrent the UK's decision could be. For another hike to remain on the table this year, the jobs data will have to remain strong overall and rebound from last month's disappointment," said Craig Erlam, senior market analyst at Oanda.
The US non-farm payrolls report will be released on Friday. |
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| Market Movers
FTSE 100 (UKX) 6,468.87 -1.17%
FTSE 250 (MCX) 15,668.45 -0.42%
techMARK (TASX) 3,207.67 -0.27%
FTSE 250 - Risers
Hochschild Mining (HOC) 230.10p 13.52%
Centamin (DI) (CEY) 165.80p 12.79%
Acacia Mining (ACA) 537.50p 8.02%
Vedanta Resources (VED) 454.40p 6.92%
Fidessa Group (FDSA) 2,080.00p 5.00%
Homeserve (HSV) 510.00p 4.19%
Polymetal International (POLY) 1,128.00p 4.16%
Synthomer (SYNT) 331.90p 3.40%
Polar Capital Technology Trust (PCT) 630.50p 3.36%
Telecom Plus (TEP) 1,030.00p 3.26%
FTSE 250 - Fallers
Tullow Oil (TLW) 210.90p -12.34%
CLS Holdings (CLI) 1,221.00p -7.85%
Softcat (SCT) 280.00p -6.67%
Clarkson (CKN) 1,677.00p -6.57%
Thomas Cook Group (TCG) 54.65p -6.18%
Aldermore Group (ALD) 104.80p -5.92%
Sophos Group (SOPH) 204.00p -5.86%
Virgin Money Holdings (UK) (VM.) 206.30p -5.80%
Big Yellow Group (BYG) 662.50p -5.69% |
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| | Europe Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Markets end in shades of red Markets in Europe ended Wednesday in various shades of red, extending their losses into a third day, with stocks in lenders worsening to levels not seen in five years.
The Stoxx Europe 600 was down 1.67%, while Germany's DAX also lost 1.67% and France's CAC 40 was off 1.88%.
In London, the FTSE 100 declined 1.25% and the FTSE 250 dipped 0.41%.
Banks were particularly hard-hit, with Banco Popolare Societa Cooperativa, Banco Popular Espanol, Credit Suisse Group and Deutsche Bank all looking at record lows in late trading.
Fresh concerns about Italian banks and the region's growth prospects were piling onto the existing worries about the fallout of the UK's referendum decision to leave the European Union.
BlackRock slashed the region's shares to 'underweight' with a negative outlook on the eurozone's banking sector, while Societe Generale's chairman warned the Italian banking crisis could spread across the continent.
"In the next three to six months, we'll see a deterioration in the fundamental data, so last week's rebound was just a rebound off technical and sentiment-driven levels," said RMG Wealth Management chief investment officer Stewart Richardson,
"Now people are beginning to think about the real issues in the medium term and may be thinking there's something not right in the system."
Some traders weren't so impressed by the market reaction, however, with Ayondo Markets chief trader Jordan Hiscott saying things were precarious long before the vote.
"Barely three years ago, Greece's banking sector had pretty much collapsed, with the issue then spreading to Cyprus. What seems to have slipped under the radar is the fact that various major European banks had lent these countries large amounts of money," he said.
"Now, less than two weeks after Brexit, the wheels seem to be coming off the EU banking sector entirely."
Deutsche Bank was among the leading losers on Frankfurt's DAX, after German factory orders failed to fire in May.
Other big lenders and financial stocks feeling the pressure were UBS Group, Lloyds Banking Group, Aviva, Aegon and Prudential.
Telecom Italia slid 11% after Xavier Niel - the majority shareholder in Iliad - revealed he planned to sell his investment.
Tullow Oil was tumbling downhill after it announced the $300m sale of convertible bonds.
Tesco fell after HSBC removed it from a list of top stocks in Europe, while competitor Wm Morrison slid after being downgraded by HSBC.
Gold and precious metals were on the up as investors drove prices up in a rush to safe havens - Fresnillo and Randgold Resources were both well ahead. |
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| | US Market Report | | US open: Markets start lower amid global jitters US markets opened lower on Wednesday as benchmark Treasury yields remained near record lows, and global markets fell.
The Dow Jones Industrial Average was down 0.33%, the S&P 500 was off 0.38% and the Nasdaq lost 0.47%.
The latest catalyst was the suspension from selling of three UK commercial property funds this week, and the Bank of England's decision to loosen regulation in a bid to encourage banks to lend more.
Many investors saw these moves as the first signs of markets stalling after the UK's shock vote to leave the European Union.
Benchmark 10-year US Treasury note yields rose to yield 1.336% ahead of the open, a good shade below Tuesday's record low of 1.357 percent.
The 30-year Treasury yield managed to hit a fresh record low of 2.098%.
Oil prices were off, with West Texas Intermediate losing 0.98% to $46.15 per barrel and Brent crude off 1.22% at $47.38.
The US May trade deficit data came through ahead of the opening bell, with the figure widening to $41.1bn against $37.4bn in the prior month.
"Any further deceleration in the pace of US employment - and hence economic - growth would take the global economy even closer to stalling speed," noted Societe Generale strategist Kit Juckes.
Pharmacy giant Walgreens Boots Alliance posted quarterly earnings, with net earnings jumping 14.7% year-on-year to $1.3bn in the three months to 31 May.
The company also reported adjusted diluted earnings per share of $1.18 on net sales of $29.5bn - more or less in line with analyst forecasts.
On the economic front, the ISM Services index for June is due for release.
The Federal Open Market Committee minutes for June are also due out - the meeting predates the UK referendum on the European Union.
"Unfortunately these aren't likely to shed too much light on the Fed's thinking vis-a-vis the state of the US economy now, particularly in light of recent events," said CMC Markets chief market analyst Michael Hewson. |
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