24th Jun 2016 09:25
LONDON (Alliance News) - Share prices in London were rebounding Friday mid-morning from lows touched shortly after the open after the UK voted to leave the European Union and Prime Minister David Cameron resigned.
Financial stocks and housebuilders were recovering some of the ground lost, whilst gold miners rocketed as the precious metal price hit a new 2016 high.
The FTSE 100 was down 4.3%, or 271.42 points, at 6,062.38. The blue-chip index had fallen as much as 8.7% in early trade. The FTSE 250 index was down 6.7% at 16,168.41 and the AIM All-Share was down 4.6% at 693.70.
The final result was confirmed at Manchester Town Hall by chief counting officer Jenny Watson at around 0720 BST. It showed Leave won by 52% to 48% for Remain. Voter turnout hit 72%, with the total number voting only second to the 1992 General Election in terms of the largest number of voters taking part.
The Leave side outperformed across the regions of England and defied the pre-vote polling and forecasts from both markets and bookmakers. Remain won in London and Scotland.
Cameron, who had campaigned for the UK to Remain in the EU said he will step down as prime minister in October. He said with a new prime minister, the UK could begin negotiating its exit from the EU.
"While the UK Prime Minister David Cameron has fallen on his sword, financial markets are of the opinion that this is far from the end of the world for UK PLC," said Accendo Markets head of research Michael van Dulken.
"The most referendum-sensitive stocks (financials, housebuilders, retail) are already delivering turnarounds and Brexit-bounce-backs. A recovery rally both here and on the continent, where the ramifications of the UK's vote to Leave are yet to be confirmed, may have legs," noted van Dulken.
Stocks in Europe also were above their worst levels, with the CAC 40 in Paris down 7.6% and the DAX 30 in Frankfurt down 6.1%.
In Asia, the Nikkei 225 index in Tokyo closed down 7.9%. The Shanghai Composite lost 1.3%, and the Hang Seng in Hong Kong fell 2.9%.
Accendo's van Dulken noted the possibility that this could be "merely a dead-cat bounce as the dust settles", but the analyst highlighted that "the early signs are certainly rather positive".
The FTSE 350 Real Estate Investment Trust sector index was down 13% at mid-morning, having traded down 26% at the open. The FTSE 350 House Goods & Home Construction sector index was off 9.2%, recovering from being 16% down shortly after the open.
"The debate over what the EU referendum means for the outlook for the UK will last much longer than today, but for now we offer the conclusion that the outcome is bad for housebuilders' shares as the combination of slowing GDP, rising longer term rates and political uncertainty is like Kryptonite for that group of shares," said Liberum analyst Charlie Campbell.
The FTSE 350 Life Insurance/Assurance sector index was down 13%, having traded down as much as 22% at the open. Meanwhile, the FSTE 350 Banks sector was down 10%, versus down 17% after the open.
Gold miners were the best performers in the both the FTSE 100 and FTSE 250, after the gold price reached a new 2016 high. Randgold Resources was up 16%, while Fresnillo was adding 11%. Mid-cap Acacia Mining was up 16%, and Centamin was adding 8.3%.
Gold was quoted at USD1,309.56 an ounce at mid-morning, having reached a 2016 record high earlier Friday at USD1,359.19 an ounce.
The pound was recovering some ground as well, quoted at USD1.3869 at mid-morning, having touched a low it hasn't seen since 1985 at USD1.3227 earlier Friday.
The Bank of England said some market and economic volatility can be expected after the UK's surprise decision to leave the EU.
"Some market and economic volatility can be expected as this process unfolds," Governor Mark Carney said in a statement. "But we are well prepared for this."
The Treasury and the Bank of England have engaged in extensive contingency planning and have put in place such measures, Carney said.
"The Bank will not hesitate to take additional measures as required as those markets adjust and the UK economy moves forward," he added.
Still ahead in the economic calendar Friday, US durable goods orders are at 1330 BST, Reuters/Michigan consumer sentiment index at 1500 BST and Baker Hughes at 1800 BST.
By Daniel Ruiz; [email protected]
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