FTSE 100 has bounced back from sharp losses after the shock Brexit vote.
It was another torrid day on global markets on Monday (Yesterday) and after the fallout on Friday, in the aftermath of the vote. Globally £1trillion has been wiped off global stock markets, making it the biggest two-day rout ever.
Yesterday, FTSE 100 closed beneath the 6,000 level but is now up 115, or 2% at 6,097, with financial stocks like Legal & General Group (LON:LGEN), up over 8% to 178.8p leading the way. The pensions and investment giant has been sending out positive noises since the result was announced.
Big cap miners are lagging with gold giant Randgold Resources (LON:RRS) leading the decline after yesterday, gaining ground after the gold price surged.
According to brokerages, small investors were out in force yesterday looking for cheap stocks, such as in the housing and banking sectors.
In small cap shares, higher is also the direction of travel. The FTSE AIM All share added 0.8% to 682.390, while FTSE AIM 100 is 37 to the good, at 3,226. Some small mining firms are faring better. Vast Resources PLC (LON:VAST) added 13% to 0.26p and Chaarat Gold (LON:CGH) added almost 12% to 8p.
Political wranglings continue today, with the Labour party staging a vote of no-confidence in leader Jeremy Corbyn and the question of who will be the next leader of the Tories now very much on the table.
PM David Cameron travels to Brussels today for a two-day EU summit, though he will only be there for a day. He has made plain that the new PM will invoke the process to start the withdrawal and fire the starting gun on negotiations.
Ana Thaker, economist at PhillipCapital UK, said: "The Brexit fallout continues as it is now announced that a new PM will be instated by September 2nd this year; a date that may mark the beginning of the official Brexit process.
"Both politicians and markets look to be unsure as to what will happen in the interim, as demonstrated by the movements of Sterling yesterday to below 1.33 against the dollar although the currency has bounced since and trades back above 1.33 this morning.
ECB president Mario DRAGHI is also due to speak later today and traders will be listening to how the central bank plans to stem fears of contagion from the UK exit, while in the US there will be GDP figures released later.
Standard & Poors yesterday cut the UK credit rating from the triple A to double A status, while Fitch clipped it from, AA+ to AA, saying Brexit would “lead to a less predictable, stable and effective policy framework in the UK”.
In company news today, African airline carrier fastjet (LON:FJET) flew over 14% lower to 24.5p as it said it had carried fewer passengers than expected in its current half year and is planning a fund raising.
Chairman Colin Child said the trading environment is challenging. Yields have picked up as have domestic routes within its main hub of Tanzania but international services remain difficult.
Some 390,000 passengers were carried in the half year to June (2015: 363,700) but load factors slumped to 47% (2015:70%) as capacity increased.
Elsewhere, Premier Veterinary Group plc (LON: PVG) added over 24% to 165p as it said it had inked anothermajor agreement in the US for its preventative healthcare programme for pets, branded as Premier Pet Care Plan (PPCP).
On the winning front, online grocery delivery service Ocado PLC (LON:OCDO) reported higher first-half profits and customer numbers despite a tough market, sending shares 11% higher to 231p.
The company revealed pre-tax profits in the 24 weeks to May 15 rose to £8.5mln from £7.2mln a year ago on a 13.9% increase in sales to £582.9mln.
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The FTSE 100 was up 2% or 130 points, ahead of pre-open forecasts at 6,111.
The top winner was Legal & General Group (LON:LGEN), up 7% to 176.5p.
The biggest loser was Fresnillo (LON:FRES), down just 1 point to 14,82p.
Preview at 7.13am
Investors in London are set for some respite after a shocking few day’s for the English.
As the bleary eyed English reflect on ‘going out of Europe’ twice in a few days (after Iceland’s soccer team knocked the Three Lions out of the UEFA championship) London’s FTSE 100 is expected to begin Tuesday on the front foot after Sterling rallied somewhat.
It comes as the markets ponder just how significant a disruption the Brexit may actually be, for them, and as the Bank of England intends to step in with support when needed some are already suggesting the worse could be avoided.
“The key question is whether the UK referendum vote represents a shock to markets or a potential genuine crisis. The focus then has to be on what would be the circuit breaker,” said Chris Weston, analyst at IG Markets.
“The answer for the latter question would likely come from another co-ordinated central bank response, with shared liquidity through swap lines and easing of monetary policy, with increased forward guidance.
“This is already being priced in, with the swaps markets pricing a 65% chance of easing from the Bank of England this year.”
He added: “Let’s see what the response is, but the risks are building and the fact we seeing buying in select stocks in the UK and elsewhere suggest most in the market feel we are seeing a short-term shock rather than something more protracted and sinister.”
Nevertheless, the volatility of recent days continued to spell negativity in international markets.
Monday saw the Dow Jones shed 260 points, 1.5%, to 17,140 while the S&P 500 gave up 1.8% to 2,000 and the Nasdaq lost 2.4% to 4,594.
In Asia trading was mixed. Japan’s Nikkei edged slightly higher, adding 0.2%, to 15,339 while the Shanghai Composite was flat. Hong Kong’s Hang Seng dipped 0.74% to 20,077.
Australia’s ASX 200 was down 0.66% to 5,103.
In commodity markets, Brent Crude Oil prices gained 1.5% to US$47.90 while America’s WTI contract had risen 1.6% to US$47.10. Gold remains volatile as the ‘safe haven’ asset tracks the overall uncertainty in markets, but this morning stood at US$1,317 per ounce.
In London the FTSE 100 is predicted to start Tuesday’s trading session more than 1% higher, as an hour before the open IG Markets was calling the index up 70 points to 6,049 to 6,051.