LONDON MARKET OPEN: Housebuilders, Banks Feel Brunt Of Brexit Rout

LONDON (Alliance News) - UK stock indices were a sea of red at the open Friday, as traders reacted to the UK voting to leave the European Union in a historic referendum.

The FTSE 100 traded down 6.5%, or 416.97 points, at 5,921.13. The blue-chip index fell as low as 5,788.84 after the open. The mid-cap FTSE 250 was hit even harder, down 9.7% at 15,657.04. The AIM All-Share index was down 5.9% at 684.22.

The final result was confirmed at Manchester Town Hall by chief counting officer Jenny Watson at around 0720 BST. It showed Leave won by 52% to 48% for Remain. Voter turnout hit 72%, with the total number voting only second to the 1992 General Election in terms of the largest number of voters taking part.

The Leave side outperformed across the country's regions and defied the pre-vote polling and forecasts from both markets and bookmakers. Remain won in London and Scotland.

Prime Minister David Cameron, who had campaigned for the UK to Remain in the European Union, said he will step down as prime minister in October. He said with a new prime minister, the UK could begin negotiating its exit from the EU.

Questions are likely to be asked about the future of Chancellor of the Exchequer George Osborne, accused consistently by Leave campaigners of "scaremongering" during the debate, and of Jeremy Corbyn, the Labour leader often criticised for having failed to make a significant impression on the In campaign.

Overnight, sterling hit its lowest level since September 1985 against the dollar at USD1.3227. The pound had been appreciating in the week prior to the referendum as opinion polls moved in favour of a Remain vote, reaching a two-month high of USD1.5018 on Thursday.

Just after the London stock market open, sterling traded the dollar at USD1.3690.

In Europe, the CAC 40 index in Paris was down 8.5% and the DAX 30 in Frankfurt was down 8.0%.

In the FTSE 100, housebuilders, real estate investors and banks were taking the greatest hit. Housebuilder Taylor Wimpey shares were down 28%, Barclays was down 26% and Royal Bank of Scotland down 24%.

The sectors had been trading positively ahead of the vote, as opinion polls and bookmaker odds pointed to a victory for the Remain camp.

In the FTSE 250 housebuilders Redrow, down 40%, Bellway, down 33%, and property company Derwent London, down 34%, were the biggest fallers.

Gold miners outperformed as investors flocked to the safe haven metals. Randgold Resources was up 19% and Fresnillo was up 13%. The price of gold was trading up at USD1,317.42 an ounce versus USD1,265.12 at the London stock market close on Thursday.

In Asia, the Nikkei 225 index in Tokyo closed down 7.9%, the Shanghai Composite fell 1.3%, and the Hang Seng in Hong Kong continues down 4.1%.

Still ahead in the economic calendar, IFO business sentiment surveys for Germany are at 0900 BST and UK mortgage approvals at 0930 BST. Later, US durable goods orders are at 1330 BST, Reuters/Michigan consumer sentiment index at 1500 BST and Baker Hughes at 1800 BST.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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