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FTSE 100 rises back above pre-Brexit levels

Last updated: 07:25 29 Jun 2016 EDT, First published: 01:49 29 Jun 2016 EDT

London skyline

Brexit, what Brexit? FTSE 100 was powering north at lunch, as traders brushed fears aside as London markets and Euro stocks went higher.

The  index of UK leading shares is up 2.18% or over 138 points at the time  of writing, at 6,277 - just a few points shy of the level it closed last Thursday night  - at 6,338.

Housebuilders were recovering, with Taylor Wimpey PLC (LON:TW.) up 2.87%, in a sector, which has been badly hit  and insurer Prudential (LON:PRU)  was top dog, up 6.22% to 1,264p as financial stocks see opportuinities, post any Brexit.

The rally is being driven by traders looking for bargains as share prices around the world have tumbled.

Electricals and mobile phone retailer Dixon Carphone (LON:DC.) was among the big losers, down 2.11% to 334.8p, despite it shrugging off last week’s Brexit vote, saying it would mean more opportunities in both Europe and the UK.

In small caps a big riser was Nostra Oil and Gas Company (LON:NTOG), up over 27%  as it stuck a deal worth US$2.1mln to sell its 20% stake in the Chisholm Trail Prospect, Oklahoma.

The buyer is a privately owned, Oklahoma based oil and gas group.


As the FTSE 100 rose over 100 points on Wednesday investors may be forgiven for wondering what the all the fuss has been about.

Standing at 6,248 the blue chip index was up 1.72% and was within 20 points of the last close before the Brexit result was known.

Wednesday’s rally was driven partially by house builders, one of the worst hit sectors after the vote, with Persimmon (LON:PSN)m Taylor Wimpey (LON:TW.) and Barratt Developments (LON:BDEV) among the better performers.

Other top risers in the FTSE 100 included insurance and financial services groups Prudential (LON:PRU) and Aviva (LON:AV.), up 5.4% and 3.8% respectively.

Travel and holiday group TUI (LON:TUI) and BA owner International Consolidated Airlines (LON:IAG) remained in the fallers column, falling 3.4% and 2.8% respectively, in the wake of the terrorist attack at Istanbul’s Atatürk international airport.

Elsewhere, the FTSE 250 rallied 1.2% to 15,691.

Nobody is pretending the past few sessions of volatility didn’t happen, but a degree of pragmatism and patience appears to have emerged and that has helped stocks rebound.

Ian Williams, analyst at Peel Hunt, has pointed out that when markets opened on Tuesday, after two days of heavy falls, many indices showed signs of ‘extreme oversoldness’.

For example, he says some 38% of the FTSE All Share index had started the day at 52-week lows, which according to Williams is the highest such concentration since November 2008.

“A snapback rally, after two days of violent markdowns, was not the biggest surprise; nobody will be confident that a short-term bottom has established yet, and it is worth remembering that, following that 2008 extreme, the low did not arrive until March 2009,” the analyst said in a note.

“The political outlook in the UK and Eurozone remains uncertain and volatility is likely to persist.”

The fact that nothing has really happened yet, as far as stepping out of Europe is concerned. Until Article 50 is triggered, in the coming months, the terms of Britain’s exit won’t be known nor will it be clear what Britain’s future relationship with Europe will look like.

Credit ratings have been downgraded and the political landscape decimated, but, at the same time the Bank of England vowed to prop up the economy (with £250bn of liquidity promised).

Investor concerns are being deferred, according to Michael Hewson, analyst at CMC Markets, who says the status quo is unlikely to change any time soon.

He added that the extra time - as the government appoints a new Prime Minister before triggering the exit negotiations - may see some of the temperature taken out of what remains a tense situation.

“Whilst that doesn’t remove the uncertainty with respect to the eventual outcome it also means that markets are going to have plenty of time to settle into their new found reality and equilibrium,” he said in a note.

FTSE 100 opening snapshot - 8:15am

The FTSE 100 opened at 6,221, up 80 points or just over 1%.

The top winner was Berkeley Group Holdings (LON:BKG), up 95p or 4% to 2,470p.

The biggest loser was Whitbread (LON:WTB), down 43p or 1.3% to 3,348p.

Preview at 6.49am

London’s FTSE 100 is expected to open positively again on Wednesday, marking a two-day rebound after the panic caused by last week’s Brexit vote.

Worries over the Britain’s exit from the European Union are being deferred by the market, according to Michael Hewson, analyst at CMC Markets, who highlights that there’s no likelihood of Article 50 of the Lisbon Treaty (the mechanism to leave) anytime soon.

In the immediate term the status quo is unlikely to change, he added.

“Whilst that doesn’t remove the uncertainty with respect to the eventual outcome it also means that markets are going to have plenty of time to settle into their new found reality and equilibrium, as the extra time allotted could well see cooler heads prevail as some of the temperature is taken out of what still remains quite a tense situation,” Hewson said in a note.

Wall Street closed Tuesday’s session sharply higher. The Dow Jones ended some 269 points, 1.57%, higher for the day at 17,409. The S&P 500 added 1.78% to 2,036 and the Nasdaq gained 2.12% to 4,691.

In Asia, Japan’s Nikkei advanced 1.9% to 15,615. Hong Kong’s Hang Seng rose by around 0.6% to 20,290 and the Shanghai Composite notched up 0.48% to 2,926.

Australia’s ASX 200 climbed 0.8% to 5,146.

In commodities, crude oil prices began closing the gap back towards US$50. Brent crude gained 3.3% to US$48.77 and WTI was up 3.7% to US$48.13 per barrel.

Gold was priced at US$1,319 per ounce, up 0.3%.

Spreadbetting and CFD group IG Markets sees London’s FTSE 100 more than 1% higher, rising 71 points, as around an hour before the open it calls the index at 6,196 to 6,201.

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