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FTSE 100 regains all its losses since shock Brexit vote despite recession fears – as it happened

This article is more than 7 years old

Stock markets in Asia and Europe are recovering, despite the massive uncertainty caused by last week’s EU referendum

 Updated 
(until 2.45pm BST) and
Wed 29 Jun 2016 13.01 EDTFirst published on Wed 29 Jun 2016 02.51 EDT
A trader at ETX Capital’s offices in London.
A trader at ETX Capital’s offices in London. Photograph: Daniel Leal-Olivas/AFP/Getty Images
A trader at ETX Capital’s offices in London. Photograph: Daniel Leal-Olivas/AFP/Getty Images

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Key events

European markets continue their rally

It was not just the FTSE 100 which moved sharply higher for the second day running. As bargain hunters returned after the recent hefty falls, markets across Europe and in the US recorded big gains despite talk of possible recession following the Brexit vote. Analysts said buyers had also moved back into the market as they realised that despite the referendum, the UK would not trigger Article 50, setting the exit from the EU in motion, for months, given the political turmoil in the country. The final scores showed:

  • The FTSE 100 finished up 3.58% or 219.67 at 6360 regaining all its losses and more since the Brexit vote
  • The FTSE 250, more focused on the UK domestic economy, ended 3.22% higher at 16,002.90 but is still down 7.6% since Thursday
  • Germany’s Dax rose 1.75% to 9612.27
  • France’s Cac closed up 2.6% at 4195.32
  • Italy’s FTSE MIB added 2.21% to 15,946.93
  • Spain’s Ibex ended up 3.45% at 8105.3
  • In Greece, the Athens market edged up 0.6% at 541.88

On Wall Street, the Dow Jones Industrial Average is currently up 227 points or 1.3%.

Meanwhile the pound has added 1% to $1.348 and 0.75% to €1.214.

On that note, it’s time to close for the evening. Thanks for all your comments, and we’ll be back tomorrow.

The UK’s leading index is up 219.67 points at 6360.06, above the 6338 level it closed at on Thursday before the referendum polls closed.

In fact it is the highest closing level for the index since 21 April this year.

And the 3.58% gain looks like the biggest one day rise since October 2011.

#FTSE100 bounces back to pre-#Brexit high, domestically-focused #FTSE250 still has a way to go but rebounding too pic.twitter.com/kYIlQppuDM

— Capital Economics (@CapEconMarkets) June 29, 2016

The FTSE 250 has finished 3.22% better at 16,002.90.

FTSE regains its post-referendum losses

The FTSE 100 has closed up 3.58% and has regained all its losses and more since the referendum. Chris Beauchamp, senior market analyst at IG, said:

The contrarian nature of markets has never been more apparent than in the past few days. We could all understand the selloff seen on Friday and then again at the beginning of this week, but the storming rally on the FTSE 100, which has seen the index rally over 7% from Monday’s low, is much harder to explain, other than via the usual combination of short-covering and bargain hunting.

The market has certainly been quite sanguine in its assessment of the situation, noting that, technically, nothing has really changed in the UK’s relationship with the EU, and that even negotiations about negotiations have yet to start. It is safe to say that, of all the post Brexit outcomes discussed across the City over the past few months, ‘buying frenzy’ was not one that was viewed as very likely. Today’s list of top risers is somewhat more diverse than yesterday, with miners enjoying healthy gains, although once again UK-focused names like house builders and insurers predominate.

Simon Bowers
Simon Bowers

Elsewhere a whistleblower who leaked details of corporate tax deals was found guilty of theft, writes Simon Bowers:

A former employee of PricewaterhouseCoopers has been convicted of theft after a court in Luxembourg found he was behind an unprecedented leak of controversial tax deals privately granted to many of the world’s largest corporations.

A judge in Luxembourg told Antoine Deltour he would avoid jail but must receive a 12-month suspended sentence and a fine of €1,500 (£1200). He found Deltour guilty on charges including theft and violating Luxembourg’s strict professional secrecy laws.

In 2014, Deltour won widespread praise for helping bring to light hundreds of controversial tax deals granted in previous years by the Luxembourg tax office. The revelations helped lay bare the tax arrangements of companies including Burberry, Pepsi, Ikea, Heinz, Shire Pharmaceuticals and others.

The full story is here:

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The Bank of England has announced that governor Mark Carney will give a speech there on Thursday at 4pm. There are no details as to what he might say, a week after the referendum, but there is of course speculation:

A boost to the #BoE Funding for Lending Scheme to encourage banks to lend is a possibility for the Mark Carney speech tomorrow #GBP

— Shaun Richards (@notayesmansecon) June 29, 2016

BOE's Carney to speak Thursday afternoon. Subject not disclosed, but has to be Brexit impact.

— Paul Hannon (@PaulHannon29) June 29, 2016

Some snippets about Brexit and its fallout from the ECB’s Vitor Constancio at the central banks forum, and he thinks things could get quite bad:

Constâncio: risks related to market turmoil - more difficult to raise capital, could trigger new phase of deleveraging. #ecbforum #brexit

— ECB Forum (@ECBForum) June 29, 2016

Constancio: ECB Must Wait A Little Bit On Any Action -- BBG

— Livesquawk (@Livesquawk) June 29, 2016

Constancio: Brexit Impact Can Be Multiplied By Confidence Effect That’s Why We Have To Discuss Whether We Need To Respond Or Not -- RTRS

— Livesquawk (@Livesquawk) June 29, 2016

Constancio: We Have Used A Lot Of Our Instruments, Still Have Some Left

— Livesquawk (@Livesquawk) June 29, 2016

ECB's Constancio: Reaction Is Not With ECB, But With Other Authorities If Downturn Severe

— Livesquawk (@Livesquawk) June 29, 2016

ECB's Constancio: Not Feasible To Engage In Big Bargain To Change Design Of Monetary Union

— Livesquawk (@Livesquawk) June 29, 2016

Constancio Does Not Exclude Situation That Things Could Get Quite Bad

— Livesquawk (@Livesquawk) June 29, 2016

Markets continue to move higher, and could get a further boost after the US Federal Reserve releases its latest annual bank stress tests later (see here), says Connor Campbell, financial analyst at Spreadex:

Against the odds this post-Brexit rebound has carried through to a second day; not only that but, if analysts are correct, the markets may well receive a boost this evening in the form of the Federal Reserve’s bank stress test results. If the US banking sector proves its resilience in the face of the Fed’s imaginary scenarios it may reassure investors that the institutions can deal with the fallout of Britain leaving the EU, therefore extending the rebound into Thursday. If the report uncovers too many weaknesses, however, the market’s recent gains may be undermined.

Brexit could hit US housing market, say realtors

More signs of a slowing US housing market.

The National Association of Realtors index for pending home sales - contracts to buy previously owned homes - fell 3.7% to 110.8 in May. Analysts had expected a fall of 1.1%, according to Reuters.

The index is 0.2% lower than in May 2015, declining year on year for the first time in almost two years. Lawrence Yun, the association’s chief economist, said:

With demand holding firm this spring and homes selling even faster than a year ago, the notable increase in closings in recent months took a dent out of what was available for sale in May and ultimately dragged down contract activity. Realtors are acknowledging with increasing frequency lately that buyers continue to be frustrated by the tense competition and lack of affordable homes for sale in their market.

Yun said the fallout from the Brexit vote provided headwinds but also opportunities:

In the short term, volatility in the financial markets could very likely lead to even lower mortgage rates and increased demand from foreign buyers looking for a safer place to invest their cash.

On the other hand, any prolonged market angst and further economic uncertainty overseas could negatively impact our economy and end up tempering the overall appetite for homebuying.

Over at the ECB Forum in Portugal a number of central bankers, including ex-ECB head Jean-Claude Trichet and former Bank of England MPC member and deputy governor Charles Bean, are discussing Brexit:

Final panel of 2016 #ecbforum. Jean-Claude Trichet, Charles Bean, Vítor Constâncio, André Sapir and Beatrice Weder di Mauro discuss #Brexit

— ECB Forum (@ECBForum) June 29, 2016
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Wall Street opens higher

There may be warnings of a UK recession, and concerns that market volatility will continue for some time, but investors are still keen to push shares higher.

In the US, Wall Street has followed the lead of other global markets and opened sharply higher. The Dow Jones Industrial Average is currently up 145 points or 0.85%, while the S&P 500 opened 0.7% better and Nasdaq 0.8% better.

The FTSE 100 is still around 2% higher although off its best levels, while Germany’s Dax is up 1.7% and France’s Cac up almost 2.5%.

Lunchtime summary

Stock markets are staging a remarkable rally today, as investors manage to put aside worries about Britain’s Brexit crisis.

The FTSE 100 index is up 135 right now, a gain of 2.2%. That means it is positive for 2016 again, and only around 60 points below last Thursday’s figure, when Britain headed to the polls.

The top riser right now is building firm Taylor Wimpey (+7%), followed by a clutch of other builders, plus mining companies and major exporters.

The top risers on the FTSE 100 at pixel time Photograph: Thomson Reuters

The pound is also gaining ground, up 1.5 cents today at $1.35. That’s around 4 cents higher than Monday’s 31-year low, but still 10 cents below pre-referendum levels.

Pound just touched $1.35 for first time this week. But still down a LOT since #EURef pic.twitter.com/ZOerJ0YML2

— Ed Conway (@EdConwaySky) June 29, 2016

almost everything "dead-cat-bounced" to pre-Brexit levels. #GBP still lagging.

— Aurelija Augulyte (@auaurelija) June 29, 2016

The rally comes despite a tidal wave of warnings about Brexit, and signals from Brussels that negotiations over Britain’s withdrawal will be tough.

For example:

Britain’s refusal to pull the trigger on Article 50, to leave the EU, has left Europe in the dark. But it also - paradoxically - seems to be reassuring the City, and sparking some bargain-hunting in the markets.

But Adam Jepsen, founder of Financial Spreads, reckons more market volatility is likely.

“Any investors who think the markets have calmed down should think again. It is far more likely that we are in the eye of the storm,”.

Especially when politicians are still grappling with how to handle the Brexit vote....

That Brexit cake discussion in full. @BBCWorldatOne pic.twitter.com/sqJ1WH76ra

— Martin Hickman (@martin_hickman) June 29, 2016
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The FT is reporting that the Bank of England had a little chat with the bosses of Britain’s largest banks today.

Apparently...

BoE officials gave the bosses of big British banks a supportive message about the amount of liquidity in the system, while pressing them to keep lending to consumers and companies to avoid a repeat of the “credit crunch” that hit after Lehman Brothers failed in 2008, according to a person briefed on the meeting.

Bank chiefs called to BoE to discuss Brexit impact https://t.co/J8QRDqDTPD

— fastFT (@fastFT) June 29, 2016

Over in Brussels, Greek prime minister Alexis Tsipras is making a new push against Europe’s austerity measures:

Listen to this. Greek PM Tsipras demanding that the democratic and social 'deficit' in the EU is addressed. pic.twitter.com/4omCW2fHPi

— Ros Atkins (@BBCRosAtkins) June 29, 2016

This week’s summit was a rare treat for Tsipras; the Brexit issue means it was one of the few gatherings where Greece’s debt crisis wasn’t on everyone’s mind.

The Brexit uncertainty has also driven investors to buy more government debt, as it is a standard ‘safe haven’ during times of crisis.

That forced prices higher, meaning that the yield on 10-year government bonds has hit a fresh record low - at under 0.6%.

That’s a ridiculously cheap level; good news for governments running deficits, but an alarming sign that markets expect little growth and weak inflation for a while.

Global 10y sovereign bond yields tumble to record low 0.5826% after Brexit, according to Citi. Via @vikramreuters pic.twitter.com/JvXNrKknfi

— Jamie McGeever (@ReutersJamie) June 29, 2016

Chris Giles, the FT’s economics editor, has just published an impassioned plea to Leave campaigner Boris Johnson to stop dithering, for the sake of the country.

He warns that Britain is sinking into recession while the man who helped win the referendum, and who now hopes to become prime minister, wonders what to do next.

In the Brexit void, the Boris bust gains momentum

Here’s a flavour:

Boris Johnson’s Vote Leave lieutenants blame their vanquished foes for the absence of a plan. It sounds like a joke, because it is a sick joke. Officials in government cannot plan what to do next until they have a policy to follow. That is how Britain works, Mr Johnson. Officials advise, politicians decide.

The man who hopes to head the government within weeks has not decided his policy for leaving the EU. He is even less prepared to enter Number 10 than Gordon Brown was. Of course, we all know why Mr Johnson has not stated what sort of Brexit he favours because any choice he makes will be a betrayal.

He could choose to retain membership of the European single market, keeping Britain a member of the European Economic Area while ditching its EU membership. That would betray those with legitimate concerns about immigration, and the xenophobes.

He could prioritise the strict control of movement of people. That would betray his beloved London and the young. Or he could dither and betray the whole country as it sinks into recession.

The time has passed when you can be all things to all people, Mr Johnson. To govern is to choose and your choice is who you betray...

More here:

My column: In the Brexit void, the Boris bust gains momentum. https://t.co/lQvOHUC7Hr pic.twitter.com/q7DCnIDAaT

— Chris Giles (@ChrisGiles_) June 29, 2016

US shares are expected to rise when Wall Street opens, in an hour’s time.

It’s being called the ‘Brelief rally’ -- but investors should remember to be cautious, given these warnings of a UK recession....

US Opening Calls:#DOW 17500 +0.55%#SPX 2050 +0.69%#NASDAQ 4321 +0.72%#IGOpeningCall

— IGSquawk (@IGSquawk) June 29, 2016

+++ FTSE 100 up 2% at 6270, £ sterling up 0.3% to $1.35. They are calling it, somewhat daftly, the Brelief rally

— George Trefgarne (@GeorgeTrefgarne) June 29, 2016

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