London’s blue-chip FTSE 100 equity index has bounced back to pre-Brexit levels, following stock markets in Europe and the US in a return to normality.
After global equities lost $3trn (£2.23trn) in value from Friday (24 June) to Monday (27 June), investors have since been bargain hunting for growth-focused assets, bullish of the UK’s vote to leave the EU not being as disastrous as predicted.
Sterling bore the brunt of market anxiety about Brexit fallout, but has since risen from a 30-year low of $1.3118 on Monday (27 June) to $1.3438 today (30 June).
Plummeting domestic currency was to blame for the fall in the UK’s stock market following the vote, although the FTSE 100 index has now made up nearly 10 per cent from last Friday’s (24 June) intraday low.
It is quite remarkable how quickly sentiment can move the price of stocks up and down without so much of a hint of company news. Laith KhalafHowever, the FTSE 250, composed of smaller, more domestically exposed companies, is still down 7.7 per cent since the poll results came in, despite increasing 3.2 per cent yesterday (29 June).
Meanwhile, US futures indicated Wall Street’s benchmark S&P 500 may dip by less than 0.1 per cent to 2,070 later today (30 June), having recovered nearly two-thirds of its post-Brexit losses.
In Europe, the Stoxx 600 was down 0.4 per cent after Asian bourses had a generally positive session, with Hong Kong’s Hang Seng adding 1.6 per cent and Japan’s Nikkei 225 ticking up 0.1 per cent; its fourth consecutive day of gains.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said the last few days have seen a tale of two stock markets playing out on the UK’s trading floors.
He said: “The share prices of big companies with international revenues have prospered, while those exposed to the UK economy have been severely marked down.
“However, in the last two days these domestic stocks have bounced significantly. It is quite remarkable how quickly sentiment can move the price of stocks up and down without so much of a hint of company news.”
After the Leave vote became evident, banking stocks like Barclays and RBS dropped by as much as 30 per cent in just one day, with many traders taking advantage.
Jordan Hiscott, chief trader at social trading network Ayondo, said: “A Leave vote was expected to batter the FTSE over a prolonged period, but interestingly, in the same time frame, the DAX, EUROSTOXX and CAC have all underperformed on a surprisingly large scale.
“Indeed, last Thursday (23 June) the DAX closed at 10258, whilst today it has only managed to recover to 9575 - a fall of some 6.8 per cent.”
peter.walker@ft.com
