FTSE 100: Treading Water Following Breakout

Market research company GfK said Brexit had prompted the biggest drop in United Kingdom consumer morale in five years. The more internationally focused FTSE 100 had a mixed day, gaining throughout the afternoon to close at 6,545.97, 0.35% up, while the domestically focused FTSE 250 lost 2.37%, closing at 15,734.68.

Business activity in the services sector matched a 38-month low last seen in April, as mounting uncertainty surrounding the European Union referendum “weighed on workloads and incoming new business”. A reading above 50 indicates growth. The yield on the U.S. 10-year Treasury dropped down to 1.333 percent, one of its lowest points in history. This is below the level of £1.3118 reached on Monday 27 June in the wake of the referendum result. Immediately after the Brexit, the pound tumbled to a three-decade low.

Markit said the results reflect the “intensified” anxiety over Brexit in the runup to the referendum.

The currency was dented after data showed Britain’s dominant services sector slipped back last month as Brexit uncertainty intensified.

‘Initially August had looked more likely, but with the economic data deteriorating and markets still nervous, it now looks probable the monetary policy committee will adjudge that immediate action is warranted, ‘ said senior economist Ben Brettell.

That’s not an option for investors in a number of major “open-ended” United Kingdom property funds, which suspended trading this week, unable to meet a wave of redemption requests.

It’s been a drab week for global stock markets, with European and Japanese indices down over the five days to yesterday as investors grapple with the fallout from “Brexit”, and United States markets largely flat.

“That’s because the stock market is looking forward to the next six months and beyond, and the Brexit vote is casting a long shadow over the United Kingdom house building sector … until we get a picture of housing activity following the referendum result, the stock market is likely to push the sell button first”.

Persimmon, Britain’s biggest housebuilder, published a trading statement that said its business was largely unaffected by the Brexit vote, although the group said it was too early to make a definitive call.

Shares in mid-cap companies Redrow, Bovis Homes and Zoopla Property fell 3.5 to 4.1 percent.

Fund managers were also hit by fears following Standard Life’s announcement with Standard Life down 4.6% and Schroders falling 5.7%.

The biggest fallers were Barratt Developments down 38p to 350.3p, Dixons Carphone down 23.3p to 286.7p, Persimmon down 103p to 1332p, Legal & General down 13.3p to 173.7p.