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London open: Stocks fall on Brexit fears
UK equities declined on Monday as concerns over a possible Brexit grew ahead of next week’s European Union referendum.
The pound fell as low as $1.4159 in early trade, its weakest since 18 April, amid rising fears that Britain could vote to leave the EU in next Thursday’s referendum.
“It appears that the Brexit fears that have, for most of the past few months, plagued the pound are beginning to really take hold of European trading as a whole, leading to the dire scenes the markets have seen since the middle of last week,” said Connor Campbell, financial analyst at Spreadex.
Investors are also cautious ahead of the Federal Reserve’s interest rate decision on Thursday. However, most economists expect the Fed to keep rates unchanged after a weak non-farm payrolls report and a dovish speech from chair Janet Yellen.
On Monday’s agenda, a report showed Chinese industrial production growth held steady in May. Industrial output rose 6% in May from a year earlier, the National Bureau of Statistics, in line with the previous month’s growth and analysts’ expectations.
Retail sales rose 10% year-on-year in May, missing forecasts for a 10.1% increase and following a 10.1% gain the previous month.
Meanwhile, oil prices declined after Baker Hughes Inc. said the number of rigs drilling for oil in the US rose by three in the week ended June 10, the second straight weekly increase.
Brent crude fell 0.69% to $50.19 per barrel and West Texas Intermediate dipped 0.88% to $48.64 per barrel at 0856 BST.
Among corporate stocks, banks and housebuilders were under pressure on Brexit worries. Lloyds and Barclays were the biggest fallers in the banking sector while Taylor Wimpey, Persimmon and Barratt Developments led housebuilders lower.
Inmarsat edged higher as it formed a partnership with maritime broadband specialist SpeedCast International to roll out the satellite company’s new Global Xpress (GX) service to around 2,000 vessels in five years.
