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Fresh battering for financial heavyweights amid Brexit fear

Published 13/06/2016

The FTSE 100 Index was down 16.35 points at 6099.12
The FTSE 100 Index was down 16.35 points at 6099.12

Heavyweight financial stocks have taken a pounding on the London market amid fresh concerns over Brexit and a wider slowdown in the global economy.

The FTSE 100 Index was down 70.79 points to 6044.97, with Lloyds Banking Group feeling the full force of the sell-off, sliding more than 4% or 2.8p to 64.2p.

The banking giant came under fire as investors expressed their concern about the impact of low interest rates and the possibility of the lender taking a substantial hit if Britain voted to leave the EU.

There was also fretting about the state of the global economy after a slew of economic data from China showed lacklustre growth from industrial production and retail sales, while expansion in fixed asset investment slowed to 9.6% from 10.5% in April.

Standard Chartered was down 15p to 500.9p and Barclays was off 4.3p to 165.2p.

The update from China also encouraged investors to dive into safe havens, with silver miner Fresnillo up 1.6% or 19p to 1233p.

Across Europe, Germany's Dax was down 1.8%, while the Cac 40 in France was 1.85% lower.

The price of oil dealt a blow to commodity stocks as it slipped 0.4% to 50.34 US dollars a barrel. Anglo American was 7.1p lower at 635.4p and BP dropped 1.9p to 368.9p.

Sterling also took a tumble after the latest EU referendum poll showed the Leave camp had opened up a 10-point lead just days before the vote.

The value of the pound hit a fresh two-month low against the dollar before rallying back to a 0.13% fall at 1.423. It came on the back of Friday's ORB poll for The Independent, which found 55% believe the UK should leave the EU.

The pound also fell 0.4% against the euro at 1.261.

Analysts now expect Britain's referendum on Europe to dominate sentiment in future sessions, with just over a week left until the public goes to the polls.

Joe Rundle, head of trading at ETX Capital, said the markets are now on full Brexit alert, with volatility expected to increase.

"Polls show it's now too close to call and markets are responding with some very twitchy activity. Sterling has shed more than 2% in two sessions to retrace its April lows, while implied one-month volatility for cable is at its highest since the depths of the financial crisis in 2008.

"Stocks across Europe are in negative territory and it's hard to see much upside until next Thursday's referendum produces a result."

In stocks, London-listed G4S dropped by as much as 8% on Monday amid revelations that the Florida nightclub shooter worked for the security firm.

It confirmed Omar Mateen, 29, who gunned down 50 people at the Pulse nightclub in Orlando, had been employed by the business since 2007.

The world's biggest security company said he worked as a staff member at a gated retirement community in south Florida.

Shares in G4S were down 9.4p to 178p.

Charles Church-owner Persimmon was down 37p to 1939p after it defended its executive pay plan that could see its senior managers share a £600 million bonus pot.

The UK's biggest housebuilder by volume said the scheme is ''designed to drive outperformance'' by returning cash to shareholders, growing the firm and boosting its share price.

The biggest risers on the FTSE 100 Index were Fresnillo up 19p to 1233p, Royal Bank of Scotland up 2.2p to 216.1p, Inmarsat up 7p to 710.5p, Rangold Resources up 45p to 6670p.

The biggest fallers were Lloyds Banking Group down 2.8p to 64.2p, Sky down 34p to 891.5p, Hargreaves Lansdown down 37p to 1231p, Standard Chartered down 15p to 500.9p.

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