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Stocks shrug off Brexit referendum

Equity markets in Europe are in positive territory as traders ignore the UK’s EU referendum announcement.

Data chart
Source: Bloomberg

The London stock market is shrugging off the possible risks of the UK potentially leaving the EU now that the referendum date has been announced.

The FTSE 100's advance this morning exceeds that of the FTSE 250, as the former’s international exposure makes it less risky than the latter in terms of ‘Brexit’ risk.

Equity markets in Europe have been on the rise since 11 February and the small retreat at the back end of last week appears to be over. Traders are trying to run with the upward momentum, and clearing last week’s highs will be the initial test of this rally.

While the FTSE 100 is above 6000, the outlook will be bullish and 6033 will need to be taken out before more investors become more confident in the rally. As long as DAX remains north of 9337 its outlook will be positive, and bulls will be targeting 9554 and 9623.

Sterling has suffered its biggest one day decline against the US dollar in more than one year on the back of the EU referendum being announced. The big picture for GBP/USD has being pointing lower since June, and the next big levels of support in sight are $1.4149 and $1.4080. The size of the sell-off might bring about a short-term snap back, and $1.4235 would be a stumbling to a move higher.

Gold is in negative territory today as the strong US dollar and the rush to buy equities has put pressure on the precious metal. Last week’s rally ran out of steam before it had chance to test the high of the month, but while it holds above $1200 its outlook will be positive. Rallies in the metal will run into resistance at $1217 and $1234.

Oil is trading higher on the news that the number of active rigs in the US is declining, and this will contribute to lower production, but it’s worth pointing out that global demand is still weak. The energy market is on the rise, and while Brent remains above $34 and WTI is north of $32.50, additional gains are possible.

Buyers of WTI will be looking towards $33.38 and Brent bulls are focused on $35.05.

FTSE 100 risers and fallers (as of 9.30am)

Company % change Index points
BP +2.04 +5.23
Rio Tinto Ltd +5.42 +4.91
Royal Dutch Shell +1.95 +4.69
Royal Dutch Shell +1.79 +4.3
BT Group +2.71 +4.04

 

Company % change Index points
HSBC -3.75 -12.83
British Land -1.44 -0.39
Berkeley Group -1.9 -0.31
Randgold Resources Ltd -1.26 -0.28
Sainsbury's -1.99 -0.28


The day ahead

Economic data: 2.45pm – US mfg PMI (February, flash): expected 52.5, prior 52.4

Corporate reporting: Allergan

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