London’s FTSE100 recouped most of its losses by the close on Thursday, but investors remained edgy after the Bank of England repeated its warnings of economic harm if the UK opts to Brexit the European Union, while Finland’s finance minister labelled such a move a “Lehman moment”.
Alexander Stubb, Finland’s finance minister, told the Financial Times that Brexit would herald “economic mayhem” and that the “the 72 hours that follow [the vote] are in many ways unpredictable.”
The blue-chip ticker closed down 16 points, or 0.3%, at 5,950 after the Bank of England left interest rates unchanged at their historically low 0.5% but repeated its stark warnings over Brexit.
Britain’s anti-EU ‘Leave’ campaign has increased its lead by seven points, rushing ahead of its rivals to 45 per cent according to a poll by Survation and IG on Thursday.
With just a week before the referendum, the Leave camp increased its lead from 38 per cent, with Remain falling two points to 42 per cent, in a phone survey from the company carried out on June 15.
It is the first time the Brexit camp has been in front since the polling began from Survation in February.
In spite of the net loss on the day, the London market, perhaps surprisingly, just avoided a majority of stocks going down. Across the market, 49% of stocks fell, while 14% gained. The remaining 37% were unchanged.
The FTSE AIM 100 Index came off rather worse than blue-chips, down 1.3% at 3,323, while the FTSE AIM All-Share Index shed 1.1% to 709.
The top gainer in London was Alexander Mining (LON:AXM), up 39% to 0.25p, while the top faller was Life Science Developments (LON:LIFE) which dropped 26% to 1.35p and triggered two price monitoring extensions although news on the stock was thin.
Midsession
London’s blue-chip shares stayed in the red on Thursday as the Bank of England warned about the risk of a UK vote to leave the EU.
The FTSE 100 Index fell 48 points to 5919 after the bank’s monetary policy committee unanimously decided to keep rates at 0.5%.
But the committee said the outcome of the referendum remained the largest immediate risk facing UK and potentially global financial markets.
Vote Leave have criticised bank governor Mark Carney for appearing to back the Remain campaign with his comments about the vote.
But Carney said the criticisms demonstrated “a fundamental misunderstanding of central bank independence.”
Two phone polls on Thursday gave the Leave campaign leads, although one was wider than the other. And betting odds still favoured a Remain vote by 61% to 39%.
Traders were focusing on the EU referendum after the Federal Reserve said on Wednesday that a UK departure from the EU was a risk to the US economy.
“The Federal Reserve specifically referred to Brexit as a risk to the US economy,” said CMC Markets analyst Jasper Lawler.
In equities, shares in Faroe Petroleum PLC (LON:FPM) spurted 9.8% to 67.5p as it reported a an oil and gas discovery in the Faroe-operated and half-owned Brasse exploration well in licence PL740 in the Norwegian North Sea.
Brazil-focused gold miner Serabi Gold plc (LON:SRB) gleamed 8.1% to 5p on news that Gold production for the second quarter of 2016 from the Company's Palito and Sao Chico Mines was matching the trend set by the first quarter of 2016 and underground exploration programmes were about to start.
Support services firm Pennant International Group PLC (LON:PEN) rose 5.8% to 55p on news of a training contract with US aircraft maker Lockheed Martin.
N Brown PLC (LON:BWNG) was in fashion with investors after the owner of the Jacamo and Simply Be brands did more business online, with 76% of new customer demand coming from the internet, up 8% against last time. Shares ticked up 6.7% to 228p.
Ariana Resources was also on the up, rising 5.26% to 1.5p after the Turkish gold explorer found a new vein system at its Kiziltepe project.
But PHSC plc (LON:PHSC) fell 16.1% to 23.5p as the health, safety, hygiene and environmental consultancy services group warned on annual results.
Investment firm 3i Group PLC (LON:III) was leading the market lower early doors, shedding 4.5% to 499.2p.
Of the small band of eight FTSE 100 risers, gold producer Randgold Resources Ltd (LON:RRS), up 4.5% to 6910p, was gaining support from risk-averse investors as the price of gold rose.
Preview at 6.53
After the Federal Reserve made no changes, the main issue for investors to chew over continues to be Britain’s pending European Union referendum.
Investors continue to be spooked by uncertainty and on Thursday London’s FTSE 100 is expected to start about 1% lower.
“The Federal Reserve specifically referred to Brexit as a risk to the US economy, upping the ante again for the ramifications of the vote on the global economy,” said Jasper Lawler, analyst CMC Markets.
“Brexit contagion does now to appear to be spreading beyond just the British pound.
“Sectors of the FTSE 100 sensitive to the UK economy, especially banks and home builders continued to be punished by investors ahead of the referendum.”
In New York, Wall Street benchmarks all edged lower on Wednesday. The Dow Jones shed 34 points, 0.2%, to 17,640 while both the S&P 500 and Nasdaq lost 0.18% each to 2,071 and 4,834 respectively.
Asian stocks were also lower.
The Nikkei gave up 3% to 15,439 after the Bank of Japan didn’t take an opportunity to provide further stimulus into its economy.
Hong Kong’s Hang Seng lost just over 2% to 20,048, while the Shanghai Composite drifted 0.3% to 2,878.
Australia’s ASX 200 was essentially flat for the day, at 5,145.
Oil prices have again been pressured, with Brent crude dropping 2.6% to US$48.56 per barrel and WTI futures seen at around US$47.55.
The price of gold rose more than 1.1% to US$1,300 for an ounce.
In London, CFD and spread betting group IG Markets sees the FTSE 100 sharply lower for Thursday – calling the benchmark at 5,913 to 5,918 about an hour before the start of trading.