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London open: Housebuilders lead FTSE higher on Brexit confidence
London stocks inched up on Wednesday morning as polls showed the EU referendum remained too close to call, though rallying housebuilding and financials stocks indicated investors were confident a Brexit will be avoided.
The FTSE 100 was 0.09% higher at 6,232.19 just before 0900 BST, though the mid-cap 250 index was down 0.24% to 16,940.10.
Sterling was almost flat against the dollar at 1.4645 and down a bit further against the euro at 1.2992, with three Brexit opinion polls due out later in the day offering the potential to rattle the pound’s cage rather significantly.
YouGov, TNS, Opinium, all online polls, are scheduled to published during the session.
“Traders are cautious today and we are expecting further volatility today as the gap continued to widen between the market expectations and Brexit polls,” said analyst Naeem Aslam at Think Forex.
“The global rally witnessed in previous days is facing some headwinds as fears over the Brexit loom. Most investors are in the mood to take some profits off the table and this could impact the volume in the market as we march towards the final hours of the referendum campaign.”
Although global markets all are said to diverted by the UK referendum, European markets began higher after a mixed Asia session and a positive US close.
At the same time, despite the stronger dollar, oil prices advanced, with West Texas Intermediate up 0.9% at $50.32 a barrel and Brent crude 0.8% firmer at $51.00.
Overnight, US Federal Reserve Chair Janet Yellen told the Senate that a rate rise could be “appropriate in the coming months”.
“But Yellen has said ‘rate hike in the coming months’ since the turn of the year,” observed Mike Van Dulken of Accendo Markets.
“And in aggregate she took a rather cautious tone. Note also that while she said a Brexit vote might not result in a US recession, ECB President Draghi said he is prepared for all eventualities come Friday.”
In corporate news, department store chain Debenhams was sharply lower after it said like-for-like sales fell in the third quarter and warned gross profit margins could be flatter than previously thought.
Housebuilders Taylor Wimpey, Persimmon, Berkeley and Barratt Developments, all of which have been hit hard by concerns about the EU referendum, were dominating the FTSE 100 risers.
Also insurers RSA, Direct Line and Admiral were joined by financial services group Hargeaves Lansdown, also indicating confidence about the result of Thursday’s vote.
