Market musings: A tale of two indices emerging as blue chips surge again
The ongoing recovery for the UK’s largest companies continued apace today, while domestic names focused on the UK also showed signs of life, albeit remaining far below pre-Brexit levels.
Following the sharp falls on Friday in the wake of the referendum result, the FTSE 100 has now enjoyed two days of hefty gains. In fact, the recovery has been so rapid that the index passed Thursday’s closing level by the end of trading, up 3.6% on the day to stand at 6,360.
Many of those hammered on Friday continue to make up lost ground, with housebuilders Taylor Wimpey (thanks again to my colleague Sam for suggesting I buy it, rather than another bank) and Persimmon both jumping 8.9% and 7.4% respectively.
Banks also continued to recover, with Barclays up 4.9%, Lloyds 1% ahead, and Royal Bank of Scotland adding 3.1%.
Indeed there were just three fallers among the blue chips, with travel operator TUI the worst affected.
However, it is a very different story for UK domestic names, with the FTSE 250 still reeling from one of the worst sell-offs ever seen.
On Friday the so-called mid-cap index, stuffed full of mid-sized housebuilders, property developers and challenger banks, fell over 7%, suffering its biggest daily points fall ever.
It has had a mixed few days since, culminating in a 3.2% gain today, to leave it at 16,003 points, still some 1,300 points below Thursday’s close.
US and European markets also climbed once more, with Germany’s DAX finishing the session 1.8% firmer, and the S&P 500 1.3% higher shortly after London closed.
Government bond yields remained stubbornly low however, with 10-year UK gilts yielding just 0.96%, even as sterling continued to edge higher to trade at $1.35 versus the US dollar.
Gold’s sharp surge failed to continue however, with the safe haven asset pausing for breath amid a lack of real answers as to what Brexit will ultimately mean.
Oil was a different story, with Brent crude up another 2.6% to trade at $49.84, although it remains below the level seen prior to the vote last week.