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LONDON (Alliance News) - Shares prices in London ended in the green Wednesday, with the pound also consolidating several days of gains, on the final day of political campaigning ahead of the UK's Thursday referendum on whether to remain in the EU or leave.
The FTSE 100 ended up 0.6%, or 34.64 points, at 6,261.19. The FTSE 250 rose 0.4%, or 63.23 points, to 17,043.54, while the AIM All-Share added 0.2%, or 1.21 points, to end at 722.33.
With the blue-chip index ending higher Wednesday, market participants seem to believe that the Remain campaign will win the vote. Survation noted that the IG EU Referendum Barometer, an indicator of what traders are predicting will happen in the referendum, shows a 75.5% chance of the UK voting to Remain, against a 24.5% chance of a vote to Leave.
"Remarkably, the index finds itself within touching distance of its June high, a clear sign that investors at least are now relatively confident that the UK will vote to remain in the EU on Friday," said IG senior market analyst Chris Beauchamp.
However, market assumptions could prove wrong as polls have pointed to a referendum that is too close to call. A new telephone poll by Survation, on behalf of IG found the Remain camp at 45% compared to 44% for Leave, with 11% still undecided. This marked an increase of two points for Leave from the last Survation poll for the Mail on Sunday, which had Remain at 45% and Leave at 42%.
Polls of polls, which aggregate the results of multiple opinion polls, show a similarly split picture ahead of the vote. The Daily Telegraph's barometer, which is based on the average of the last six polls released, has the two level pegging at 50% apiece, taking out undecided voters.
"After a largely positive week of trading it will be interesting to see how investors behave on Thursday, when the anxiety over the referendum will potentially be at its most acute," SpreadEx analyst Connor Campbell said.
Hargreaves Lansdown senior analyst Laith Khalaf said the outcome of the referendum "is in the balance, and on top of that we don't know precisely how markets will react to either outcome".
Khalaf believes cyclical sectors, in particular banks and housebuilders, are likely to do well in the event of a Remain vote, and vice versa in the event of a decision to leave the EU.
Financial stocks such as banks ended firmly in the green in the run up to the vote Thursday. Fund supermarket Hargreaves Lansdown was the best performer, up 3.3%, and Anglo-South African financial services company Old Mutual rose 3.0%. Emerging markets lender Standard Chartered added 3.0%, while UK-focused Royal Bank of Scotland Group ended up 2.4%.
The pound remained higher against the dollar, holding its recent gains, though somewhat below its high on Tuesday of USD1.4783, a level it hadn't seen since early January. Sterling was quoted at USD1.4712 at the London equities close Wednesday, compared to USD1.4661 at the same time Tuesday. The UK currency had rallied sharply on Monday, experiencing its best session in eight years, after a heavy decline last week when polls gave the Leave campaign the lead.
The euro was also higher against the greenback, standing at USD1.1280 at the London equities close Wednesday, compared to USD1.1262 late Tuesday. Stocks in continental Europe also ended higher, with the CAC 40 in Paris up 0.3% and the DAX 30 in Frankfurt up 0.6%.
In New York, the picture was also brightly green, with the Dow 30 up 0.1%, the S&P 500 up 0.3%, and the Nasdaq Composite up 0.5%.
Gold was quoted at USD1.268.67 an ounce at the London close, lower than USD1,270.61 on Tuesday. Meanwhile, crude prices fell sharply after the Energy Information Administration said US commercial crude oil inventories decreased only by 900,000 barrels from the previous week. Economists had expected a fall of 1.6 million barrels.
Brent was quoted at USD50.88 a barrel before the data was released, before falling on the EIA's inventories update to stand at USD49.82 a barrel at the London equities close. The North Sea benchmark stood at USD49.87 per barrel at the London equities close Tuesday.
Among individual stocks in London, Associated British Foods ended as the biggest decliner, down 2.8%, after Morgan Stanley downgraded the FTSE 100 food, ingredients and retail group to Equal Weight from Overweight.
In the FTSE 250, specialty chemicals company Elementis ended as the worst mid-cap performer, down 8.1%, after saying its earnings for 2016 are set to miss market expectations amid difficult conditions for its chromium division.
Elementis's specialty chemicals company peer Synthomer fell 4.9%, after UBS cut its recommendation on the stock to Sell from Neutral. The Swiss bank said it expects Synthomer to de-rate as the market prices in further medium- and long-term challenges.
Meanwhile, Debenhams ended down 6.1%. The department store chain said its annual pretax profit is set to meet its guidance, though it slightly pulled back its margin forecasts as like-for-like sales declined in the 15 weeks to June 11. Debenhams said the trading environment in the UK has been weaker since the turn of the year, particularly for clothing.
Among mid-caps in the green, Circassia Pharmaceuticals rose 8.8% to 105.50 pence. The biopharmaceutical company's shares had pulled back 6.7% on Tuesday, rebounding from the 66% loss seen Monday, when it had said a late stage study for its key cat allergy treatment failed to achieve its primary endpoint, as the treatment and a placebo used in the study proved equally effective. Having started trading in London in March 2014, the stock hit a record low of 87.00p on Monday.
Cineworld Group added 3.4% after New York-listed IMAX said it has signed a deal with the London-listed cinema operator for the installation of five new IMAX theatres in new multiplexes in the UK and across other European markets.
In a light UK corporate calendar Thursday, Tesco releases a trading statement while DS Smith publishes full-year results.
In the economic calendar, China's MNI business sentiment indicator is due a 0245 BST, while Japan's Nikkei manufacturing Purchasing Managers Index is at 0300 BST. Markit manufacturing, services and composite PMI readings for France, Germany and the eurozone are at 0800 BST, 0830 BST and 0900, respectively.
In the US, initial and continuing jobless claims are at 1330 BST, while Markit's manufacturing PMI is at 1445 BST. US new home sales are at 1500 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
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