Day market bet big on Remain
Shares soar £47.5bn and pound takes its biggest leap in eight years . . .
Banks and housebuilders led the stock market higher yesterday and sterling clocked up its best day for nearly eight years as investors bet that Britain would stay in the EU.
shares in state-backed lenders Royal Bank of scotland and Lloyds Banking Group rose more than 7pc while Taylor Wimpey and Barratt Developments climbed more than 6pc. It came as the FTsE 100 index enjoyed its best day since august last year and the pound recorded its strongest performance since October 2008.
analysts said the rally was a sign that investors from around the world now expect Britain to remain in the European Union – allaying fears of an economic hit following Brexit.
Financial markets have swung wildly in recent weeks amid uncertainty over the outcome of the referendum on Thursday.
Laith khalaf, senior analyst at savings and investment firm Hargreaves Lansdown, said: ‘Waves from the Brexit vote are buffeting the Uk stock market, tossing it up and down as the opinion polls shift this way and that. Until the vote is over we can expect more price swings, as markets struggle to price in a unique event that carries with it such a high degree of uncertainty.
‘If you want to get an idea of what stocks will do well in the event of a vote to stay in the Uk, it’s worth taking a look at the FTsE leaderboard. The market has clearly identified financials and housebuilders as beneficiaries of a vote to remain in the Uk, with a sterling rally also indicating how the currency might move if we vote to remain in Europe.’
Hargreaves Lansdown topped the blue-chip leaderboard, up 7.8pc, or 96p to 1325p, while Lloyds was up 7.6pc, or 4.95p to 70p and RBs gained 7pc, or 15.6p to 237.7p. Taylor Wimpey was up 6.8pc, or 12p to 188p, Barratt jumped 6.8pc, or 36p to 567.5p and Barclays closed 6.7pc, or 11.1p higher at 176.85p. The FTsE100 index jumped 3pc, or 182.91 points to 6204 – adding £47.5bn to the value of the Uk’s leading companies. The FTsE 250 was also on the front foot – up 3.3pc, or more than 500 points to 16,959.11 – with challenger bank shawbrook up 15pc, or 35.9p to 275.9p and builder Redrow up 7.9pc, or 29.9p to 407.1p. Other stocks to make significant gains included British airways owner IaG, up 6pc, or 28.7p to 507p, and Thomas Cook, up 8.3pc, or 5.3p to 68.95p. analysts said these stocks benefited from the rise in the pound – boosting Briton’s spending power overseas and the likelihood of families to travel abroad for their holidays. Chris Beauchamp, senior market analyst at City trading firm IG, said: ‘anything vaguely connected to the Uk economy is in high demand this afternoon, with banks, housebuilders and commercial property owners all seeing frenetic interest.’ sterling was up 2.5pc against the dollar to over $1.47 and 2pc against the euro to around €1.30. shares across Europe were also on the rise and commodity prices pushed higher, with oil back above $50 a barrel and copper up 2pc. Gold, a traditional haven that investors turn to for safety in times of worry, fell sharply after hitting a two-year high above $1,300 last week on fears over Brexit. kit Juckes, a strategist at societe Generale in London, said: ‘They think it’s all over. It isn’t, yet. The market will surely gyrate some more in the next few days.’ Beauchamp said that ‘such is the importance of the Brexit referendum to global markets that all other concerns have been cast aside, at least for now’.