Spreadex Market Update
Cameron resignation and Carney statement cause FTSE to halve losses, though markets remain a bloody shade of red
It seems two events share the majority of the responsibility for the relative improvement in the market situation. First was David Cameron’s resignation. Though this could have easily introduced another bout of volatility, the swiftness of his announcement, alongside the fact he will remain Prime Minister until autumn, fed investors a crumb of stability when they needed it most.
Secondly, and arguably more importantly, Mark Carney expanded on the Bank of England’s earlier statement, revealing the central bank will offer an additional £250 billion, on top of its usual operations, to calm the markets. Add on that a similar, if less specific, promise from the ECB, and the FTSE saw its losses go from 9% to 4.5% as the morning continued.
Not to say the day’s losses aren’t deeply worrying. The pound, although lifted slightly from its nadir, is still at $1.36 against the dollar (a 7.6% fall) and €1.23 against the euro (a 5% dive). The banking stocks are also taking a hammering, Barclays, RBS and Lloyds down anywhere between 18-22%. Housebuilders, in anticipation of the oft-repeated warning of a post-Brexit house price plunge, remain the worst hit sector, Persimmon leading the downward charge with a 24% drop.
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