LONDON MARKET MIDDAY: Receding Brexit Fear Lifts Stocks And Pound

LONDON (Alliance News) – London stock prices and the pound both were higher Monday at midday, after the latest opinion polls about the UK’s European Union referendum on Thursday showed the Remain vote in the lead.

The FTSE 100 was up 3.0%, or 178.11 points, at 6,199.20, led by banks and housebuilders. The blue-chip index was recovering all the ground lost last week, having touched a four-month low of 5,899.97 points on Thursday.

The FTSE 250 index was adding 2.9% to 16,895.07, while the AIM All-Share was up 1.0% at 721.33.

The first opinion polls since the murder of Labour MP Jo Cox last Thursday showed a swing in favour of remaining in the EU. A poll by Survation on behalf of the Mail on Sunday showed Remain on 45% to 42% for Leave.

In addition, a poll by YouGov for the Sunday Times found support for Remain rose 5 percentage points to 44%, with the Leave campaign falling three points to 43%.

“The market has clearly identified financials and house builders as beneficiaries of a vote to remain in the UK, with a sterling rally also indicating how the currency might move if we vote to remain in Europe,” said Laith Khalaf, senior analyst at Hargreaves Lansdown.

The pound was quoted at USD1.4604 at midday, compared to USD1.4264 at the London equities close Friday. On Thursday, the pound touched a low of USD1.4011, a level it hasn’t seen since February.

Royal Bank of Scotland was up 7.3%, the best blue-chip performer, followed by fund supermarket Hargreaves Lansdown, up 7.0%. Meanwhile, housebuilder Barratt Developments was adding 6.4%.

Nevertheless, Khalaf warned that “until the vote is over we can expect more price swings, as markets struggle to price in a unique event that carries with it such a high degree of uncertainty”.

Among the few decliners in the FTSE 100 were Randgold Resources and Fresnillo, down 2.6% and 1.5%, respectively. The gold miners were suffering from a decline in the precious metal’s price. Gold was quoted at USD1,281.82 an ounce at midday, compared to USD1,286.70 on Friday. It touched a high of USD1,315.44 on Thursday, a level it hasn’t seen since August 2014, and the two stocks had been beneficiaries of this last week.

In the FTSE 250, Circassia Pharmaceuticals was by far the worst performer, down 64%, after it said a late-stage study of its key cat allergy treatment failed to achieve its primary endpoint, as the treatment and a placebo used in the study proved equally effective.

Beyond the negative outcome being bad news for Circassia’s cat allergy treatment, it has knock on implications for the company’s entire strategy, as it has a number of allergy products in various stages of development in its pipeline which will now be called into question.

On AIM, Verona Pharma was up 25% at 3.53 pence. The respiratory drug development company said after the London equities close on Friday that it will raise GBP44.7 million through a share placing, with shares to be placed at 2.876 pence per share and funds to be used for a clinical trial of its RPL554 drug, as well as for additional Phase 2 studies. Verona Pharma said it has secured funding commitments through a conditional placing with new and existing investors.

In Europe, the CAC 40 index in Paris was up 3.3% and the DAX 30 in Frankfurt was adding 3.4%. Like the pound, the euro was appreciating against the dollar, quoted at USD1.1335 at midday. The single currency stood at USD1.1248 at the close Friday.

In Asia, the Nikkei 225 index in Tokyo ended up 2.3% and the Shanghai Composite closed up 0.1%. The Hang Seng in Hong Kong added 1.7%.

In New York, stocks were called for a positive open, with the Dow 30 seen up 1.2% and the S&P 500 and the Nasdaq 100 indices both pointed up 1.3%.

In a very light economic calendar Monday, eurozone construction output decreased for the third straight month in April, Eurostat reported. Construction output dropped 0.2% month-on-month in April after falling 1.0% in March. On a yearly basis, construction output slid 0.4%, in contrast to March’s 0.5% increase.

By Daniel Ruiz; danielruiz@alliancenews.com

Copyright 2016 Alliance News Limited. All Rights Reserved.

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