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FTSE 100 starts to recover after post-Brexit losses

Published 08/07/2016

The FTSE 100 Index was 56.9 points higher at 6590.6
The FTSE 100 Index was 56.9 points higher at 6590.6

London's top flight index pushed higher as housebuilders began to rally back from the punishing losses seen since the Brexit vote.

The FTSE 100 Index was 56.9 points higher at 6590.6 thanks to a surge from property stocks which dominated the biggest risers after falling back in favour with analysts.

Taylor Wimpey stepped up more than 7% or 9.4p to 131.5p, while Berkeley Group lifted 167p to 2491p, after UBS analyst Gregor Kuglitsch said housebuilders were in better shape now than during the 2008 financial crash.

Tony Cross, market analyst at Trustnet Direct, said: "It's been a solid finish to the week for London's FTSE 100, although the blue chip index is closing just shy of the 6,600 level.

"Housebuilders have been in for something of a bumper day after supportive analyst comments suggested that the recent sell-off may have been overdone, making current prices an attractive entry point for investors."

European markets were also buoyed by better-than-expected employment data from the United States, with e mployers bouncing back from two months of lacklustre hiring by adding 287,000 jobs in June.

The rise followed shock figures from the US economy in May when only 11,000 new jobs were created.

Germany's Dax raced ahead following the news, up 2.2%, while the Cac 40 in France rose 1.7%.

It came despite the International Monetary Fund warning that the eurozone was on course for an economic slowdown in the wake of Britain's decision to leave the European Union.

The IMF slashed its growth forecasts for the single currency bloc amid rising uncertainty, increased market volatility and falling exports to Britain.

It now expects the eurozone gross domestic product (GDP) to grow by 1.6% this year and 1.4% in 2017, downgrading its outlook from forecasts before the EU referendum vote of a 1.7% rise for this year and next.

Sterling was also enjoying an uplift following the strong employment figures from across the Atlantic. The pound was up 0.4% against the dollar at 1.296 US dollars and rose 0.6% against the euro at 1.173.

In stocks, precious metal miners saw their share price come under pressure, with silver miner Fresnillo dropping 46p to 1870p and gold miner Randgold Resources falling 15p to 9265p.

Banking stocks were also rising after falling victim to a sharp sell-off following Britain's vote to leave the European Union.

Royal Bank of Scotland was up 10.2p to 168.8p and Lloyds Banking Group rose 2.9p to 52.6p.

Retail stocks held strong despite a report showing that c onsumer confidence recorded its sharpest drop in more than 20 years since the Brexit vote.

Some 60% of consumers expect the general economic situation to worsen in the next 12 months, up from 46% in June, while just 20% expect it to improve, down from 27% last month, a one-off GfK Consumer Confidence Barometer survey taken after the referendum found.

High street bellwether Next climbed 178p to 4943p, while supermarket giant Tesco rose 3p to 163.2p.

The biggest risers on the FTSE 100 Index were Taylor Wimpey up 9.4p to 131.5p, Berkeley Group up 167p to 2491p, Barratt Developments up 24.1p to 373.2p, Royal Bank of Scotland up 10.2p to 168.8p.

The biggest fallers were Fresnillo down 46p to 1870p, Antofagasta down 8p to 456.7p, Imperial Brands down 52p to 4035.5p, Coca-Cola HBC down 18p to 1536p.

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