London’s FTSE100 index closed firmer after a see-saw session on Tuesday but smaller stocks were hurt as post-Brexit sterling fell 2% and hit a new 1985 low, a gilt auction marked a record-low yield, and the Bank of England pumped emergency liquidity to banks.
BoE governor Mark Carney today unveiled a £150bn lending boost to keeping Britain’s economy going as he warned it could be hit by a “material slowing”.
Carney stopped short of repeating his pre-EU referendum warning that the country may tip into recession if it voted to leave the EU. But he warned that risks of Brexit were starting to “crystallise”.
The blue-chip ticker ended up 0.35% at 6,545, but the less internationally-exposed mid-cap FTSE 250 index shed 382 points, or 2.4%, to 15,734.
The smaller-cap FTSE AIM 100 Index was off 1.5% at 3,346 while the FTSE AIM All-Share Index fell by 1.2% to 705.
The blue-chips might be the largest stocks, but losing stocks outnumbered others in London, representing 45%, while the gainers were just 20% and unchanged were steady 35%.
Sterling hit $1.30, a fresh 31-year low, while the UK’s first government bond sale since the country voted to leave the European Union passed achieved record low yields and robust demand. The five-year gilt found favour as investors sought safer haven in uncertain times as more property funds, such as M&G, followed Standard Life’s lead to suspend trading in its pooled property funds.
In spite of a sharp sell-off in oil on renewed demand worries – Brent came off 4.7% to $47.76 - the top gainer in London was Tlou Energy (LON:TLOU), which rose 27% to 5.25p after being selected for an approved 50 megawatt power plant project at Lesedi in Botswana.
The biggest faller was chemicals group Cronin (LON:CRON) which dropped 30% to 0.875p.
Midsession
Smaller UK stocks tumbled and the pound hit fresh 31-year lows amid dire service sector data after the ‘Brexit’ vote.
The FTSE 250, which unlike its senior FTSE 100 Index sibling contains more UK-focused stocks, fell 418.8 points to 15,697.9.
The Footsie, which has more companies with less business in Britain, rose 5.76 points to 6528.02 while the FTSE AIM 100 was 41 points off at 3359.05.
Sterling tumbled to a 31-year low against the dollar and oil dropped below US$49 a barrel as fears rose about the hit that the UK economy could take from the EU referendum result.
Service sector PMI figures showed industry activity weakening in June and growth during the second quarter at its slowest since the first three months of 2013.
Just to compound the woe, Aviva PLC (LON:AV.) became the second major fund manager after Standard Life (LON:SL.) to suspend dealing in its property fund.
Hargreaves Lansdown analyst Laith Khalaf said: “The dominos are starting to fall in the UK commercial property market.”
Meanwhile, Bank of England governor Mark Carney said the UK was entering a more risk-adverse market since the vote and spillovers were “notable”.
On the markets, banks and housebuilders took the brunt of the negative sentiment, with Berkeley Group Holdings PLC diving 6.3% to 2329p and Legal & General Group PLC (LON:LGEN) losing 6% to 175.7p.
Over in the US, trading in commercial and financial stocks will resume after the public holiday yesterday.
Among smaller stocks, Tlou Energy Ltd (LON:TLOU) powered up 29.7% to 5.35p after the government of Botswana gave permission for a 10megawatt coal-bed methane scheme five times larger than the company had originally planned.
Shares in Petroneft Resources PLC (LON:PTR) ticked up 15.2% to 2.275p on news that the Russia-focused oil & gas explorer had successfully completed a three-well initial development programme.
But Gulf Marine Services PLC (LON:GMS) sank 15.4% to 39.75p as the support vessel provider reported early contract terminations.