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London open: Stocks rebound in Brexit aftermath
London stocks rebounded on Tuesday after two days of declines in the aftermath of Brexit.
Housebuilders led the gains as they recovered from the initial shock of Britain’s vote to leave the European Union. Shares in Taylor Wimpey, British Land and Bovis Homes rose.
Equity markets have lost more than $3trn in the past two days of trading, exceeding losses of the financial crisis. The pound has also dropped by more than 11%, its biggest two-day fall in more than three decades.
David Cameron said on Monday that Article 50 will not be triggered as yet and negotiations over the UK’s exit from the EU will wait for the new prime minister.
FXTM chief market strategist Hussein Sayed said Cameron’s proposal against enacting Article 50 “will only lead to a prolonged period of uncertainty, exposing the pound to more downside risk”.
“I would say another 5-10% drop from current levels can’t be ruled out in the next couple of weeks.”
The Bank of England will hold a third additional Indexed Long-Term Repo operation around the EU referendum at 1000 BST. The ILTR was scheduled ahead of the referendum to provide extra liquidity in case it was needed.
European Central Bank president Mario Draghi is also due to speak at 900 BST in Sintra, Portugal, where any remarks on Brexit will be closely scrutinised.
In the US , economic growth data is due at 1330 BST along with the S&P/Case Shiller home price index at 1400 BST and consumer confidence index at 1500 BST.
On the corporate front, Legal & General surged after announcing the appointment of former Second Permanent Secretary of HM Treasury, Sir John Kingman, as group chairman.
Old Mutual edged higher even as it said underlying businesses may be affected by the UK’s vote to leave the EU.
Online grocer Ocado jumped as it said revenue and earning grew in the first half of the year..
