One minute markets: Brexit risks really are crystallising now

UK equity markets moved lower once more today, with US and European shares also weaker, as the risks to the economy – and other markets – from Brexit continued to fall a sharp jump in volatility.

If last week showed the largest companies in the UK could shrug off some of the impacts of Brexit as other assets (sterling and gilts) bore the brunt of it, this week suggests something more broad-based may be setting in for the blue chips.

The FTSE 100 ended the session 1.3% lower at 6,463 points, driven lower by the big supermarket chains Tesco and Morrison following an aggressive pricing move by major rival Asda. The US-owned supermarket said in the current environment it would prioritise sales growth over profitability, in a warning which sent listed UK supermarkets tumbling.

Both Tesco and WM Morrison closed down 8.1% and 7.2%, while banks also remained under pressure, with Lloyds the worst performer, off 6.9%.

On the upside, the same names continued to dominate, with gold miners Fresnillo and Randgold Resources up 6.1% and 4.4% respectively amid the ongoing surge in gold. The precious metal is up nearly 10% since the Brexit decision and enjoyed another positive session today, up 1.2% at $1,372 as London closed.

If the situation looks a little precarious for the blue chips, the situation for the mid caps is much bleaker at present, with the FTSE 250 down another 0.4% today, at 15,669.

Challenger banks and housebuilders were among the worst performers, mimicking some of the losses seen among the blue chips, although the falls were not as bad as some of the other sessions seen over the past week.

Meanwhile, the pound continued to tumble, hitting a fresh 31-year low at $1.284 versus the US dollar. A fall to as low as $1.10 is currently being mooted by some analysts in the City.

Overseas markets were also weaker, with the S&P 500 down marginally as London closed, and the German DAX off 1.7%.

 

 

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 2%

6,338 points at close on 23 June.

6,463 points at close on 5 July.

FTSE 250: DOWN 10%

17,334 points at close on 23 June.

15,669 points at close on 5 July.

FTSE All Share: DOWN 0.2%

3,481 points at close on 23 June.

3,475 points at close on 5 July.