One minute markets: Pound and gilts take the strain while mid caps sink

UK blue chips managed to eke out further gains today despite mounting problems for property stocks, with investors instead using the pound and gilts – as well as the FTSE 250 – to voice their concerns over Brexit.

Chartists were kept busy as the pound plunged to a 31-year low (no, that’s not a typo) during trading, down to $1.30181. UK government debt also saw yields plunge to a new record low, with ten-year gilts paying just 0.77% as demand for safe havens showed no sign of letting up.

Gold also moved higher as investors grew concerned about the outlook for UK gilts, with the precious metal rising to $1,349.

While investors are no doubt fretting about the outlook for the UK, large cap equities continued to make headway, with the FTSE 100 finishing the session up marginally at 6,545 points.

It was driven higher by a range of classic defensives, including British American Tobacco, GlaxoSmithKline and National Grid, which ended the day up between 2.75% and 2.35%.

Gains in these stocks – which are some of the largest listed companies in the UK and which therefore have more of an impact on markets – cancelled out heavy losses for property companies and housebuilders, amid mounting fears the property bubble is now bursting.

On a day when some of the largest property funds in the UK were forced to suspend trading because too many investors were trying to exit, Barratt Developments, Persimmon and Taylor Wimpey all slumped between 9.8% and 7.1%.

Once again, it was a far tougher session for the FTSE 250 which closed at a new post-Brexit low (see our new Brexitometer below for the full and horrifying tale of its impact thus far). The index, more severely impacted by concerns over the UK economy than the international names which dominate the blue chips, finished down 2.4%, at 15,734 points. Names including Bovis Homes, which dropped 8%, dragged the index lower.

Overseas, markets were also weaker, with the German DAX down another 1.8% for the day, and even the S&P 500 heading south, off 0.8% at 2,086 points shortly after London closed.

 

The Brexitometer

In the wake of the crisis, and in order to provide a quick and easy snapshot of the real impact of Brexit on markets, we will be updating the Brexitometer daily, detailing the impact of the EU referendum result on UK markets.

FTSE 100: Up 3%.

6,338 points at close on 27 June.

6,545 points at close on 5 July.

FTSE 250: Down 9%.

17,334 points at close on 27 June.

15,734 points at close on 5 July.

FTSE All Share: Up 1%

3,481 points at close on 27 June.

3,514 points at close on 5 July.