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Brexit fears drive London stock market down to three-month low - live Brexit fears drive London stock market down to three-month low - live
(35 minutes later)
4.02pm BST
16:02
The London stock market has now suffer four days of steady losses, as the City has become steadily consumed by the looming EU vote.
Mihir Kapadia, CEO at Sun Global Investments, says the markets are being hit hard by Brexit uncertainty.
‘’The risk of a potential ‘Brexit’ is dominating global markets today as we enter the home straight towards the influential EU referendum vote on 23 June.
Investors seem to have suddenly woken up to Brexit risk and have become nervous....
3.52pm BST
15:52
The London stock market has hit a new three-month low as it staggers towards the close with fresh losses.
The FTSE 100 index of blue-chip shares just fell as low as 5944 points, a loss of 101 points today.
Almost every share has lost ground. Mining group Anglo American is the worst performer, down 4.6%.
3.35pm BST
15:35
Ouch. The pound just slipped below $1.41 for the first time in two months.
The TNS poll, showed Leave holding a 7-point lead, is clearly weighting on the markets.
Risk-off drift-off
3.33pm BST
15:33
Investors haven’t been this worried about a sterling crisis since the aftermath of Lehman Brothers’ collapse:
The cost of "insuring" against sharp movement in the£ appears to be back to financial crisis levels - up 4.3% today pic.twitter.com/xWW1nzyCWk
3.13pm BST3.13pm BST
15:1315:13
Pound hit after TNS gives Leave a 7% leadPound hit after TNS gives Leave a 7% lead
The pound just took another knock, after the TNS polling company reported that the Leave campaign have a “significant lead” in the run-up to the EU referendum.The pound just took another knock, after the TNS polling company reported that the Leave campaign have a “significant lead” in the run-up to the EU referendum.
TNS says that Leave is on 47% of the vote, with Remain trailing at 40% (with 13% of voters still undecided).TNS says that Leave is on 47% of the vote, with Remain trailing at 40% (with 13% of voters still undecided).
And sterling is now down one and a half cents, or 1%, at $1.411 - its lowest point of the day.And sterling is now down one and a half cents, or 1%, at $1.411 - its lowest point of the day.
If the TNS poll just released is genuine then we have Leave : 47% (+4)Remain: 40% (-1)Don't Know: 13% (-3)#BrexitIf the TNS poll just released is genuine then we have Leave : 47% (+4)Remain: 40% (-1)Don't Know: 13% (-3)#Brexit
2.59pm BST2.59pm BST
14:5914:59
ECB and Bank of England to backstop markets after Brexit voteECB and Bank of England to backstop markets after Brexit vote
Insiders at the European Central Bank have revealed they would publicly pledge to backstop financial markets, in partnership with the Bank of England, should Britain vote to leave the European Union.Insiders at the European Central Bank have revealed they would publicly pledge to backstop financial markets, in partnership with the Bank of England, should Britain vote to leave the European Union.
It’s a clear signal that central bankers are preparing for Britain to shock the global markets and vote for Brexit.It’s a clear signal that central bankers are preparing for Britain to shock the global markets and vote for Brexit.
Reuters has the story. Here’s a flavour:Reuters has the story. Here’s a flavour:
The preparations illustrate the heightened state of alert ahead of the June 23 referendum, which will help determine Britain’s future in trade and world affairs and also shape the EU. The pound and euro have lost value on fears a Brexit could tip the 28-member bloc into recession.The preparations illustrate the heightened state of alert ahead of the June 23 referendum, which will help determine Britain’s future in trade and world affairs and also shape the EU. The pound and euro have lost value on fears a Brexit could tip the 28-member bloc into recession.
Such an announcement from the ECB would come on June 24 if an early-morning result showed that British voters had chosen to leave the EU, according to the sources. The aim is to underpin investor confidence across Europe and contain further market jitters.Such an announcement from the ECB would come on June 24 if an early-morning result showed that British voters had chosen to leave the EU, according to the sources. The aim is to underpin investor confidence across Europe and contain further market jitters.
“There will be a statement to do whatever it takes to maintain adequate market liquidity,” said one senior central bank official, who spoke on condition of anonymity.“There will be a statement to do whatever it takes to maintain adequate market liquidity,” said one senior central bank official, who spoke on condition of anonymity.
The ECB’s pledge would involve opening so-called swap lines with the Bank of England, allowing euros and sterling to be exchanged and effectively making unlimited funding in both currencies available to European banks, the sources said.The ECB’s pledge would involve opening so-called swap lines with the Bank of England, allowing euros and sterling to be exchanged and effectively making unlimited funding in both currencies available to European banks, the sources said.
Here’s the full story:Here’s the full story:
Exclusive: ECB would pledge to backstop markets after a Brexit - sourcesExclusive: ECB would pledge to backstop markets after a Brexit - sources
ECB ready for Brexit: "There will be a statement to do whatever it takes to maintain adequate market liquidity" https://t.co/CmVCiGti2rECB ready for Brexit: "There will be a statement to do whatever it takes to maintain adequate market liquidity" https://t.co/CmVCiGti2r
2.50pm BST2.50pm BST
14:5014:50
The US stock market has opened calmly, bring some order to proceedings after a volatile European session.The US stock market has opened calmly, bring some order to proceedings after a volatile European session.
The Dow Jones industrial average has dipped by 0.1%, or 15 points, while the Nasdaq index of tech stocks is up 0.2%.The Dow Jones industrial average has dipped by 0.1%, or 15 points, while the Nasdaq index of tech stocks is up 0.2%.
Investors may be keen to sit sight until the UK’s referendum has been cleared up; and few believe the Federal Reserve could raise interest rates at this week’s two-day meeting (which finishes tomorrow).Investors may be keen to sit sight until the UK’s referendum has been cleared up; and few believe the Federal Reserve could raise interest rates at this week’s two-day meeting (which finishes tomorrow).
Christopher Vecchio, currency analyst at DailyFX, says:Christopher Vecchio, currency analyst at DailyFX, says:
With all the attention on the Brexit, the central bank meetings this week have seemed to take a back seat. This makes sense, though. If the Fed hikes, and there is a Brexit? The Fed will have to backtrack, which will cost them credibilityWith all the attention on the Brexit, the central bank meetings this week have seemed to take a back seat. This makes sense, though. If the Fed hikes, and there is a Brexit? The Fed will have to backtrack, which will cost them credibility
2.31pm BST2.31pm BST
14:3114:31
Pro-Brexit economist Dr Gerard Lyons has written a piece for us, arguing that UK manufacturing could thrive outside the EU.Pro-Brexit economist Dr Gerard Lyons has written a piece for us, arguing that UK manufacturing could thrive outside the EU.
Here’s a flavour:Here’s a flavour:
In the future we can craft policy to suit domestic needs, not least the possibility of an industrial policy if we wanted it.In the future we can craft policy to suit domestic needs, not least the possibility of an industrial policy if we wanted it.
We could directly help sectors. The US, never accused of not being free market, directly targets help to strategic sectors, like autos. So too could we if we wished. EU state aid rules prevent the ability to selectively help areas or sectors. Add in the need to abide by EU regional development criteria, and our hands are tied on regional policy too.We could directly help sectors. The US, never accused of not being free market, directly targets help to strategic sectors, like autos. So too could we if we wished. EU state aid rules prevent the ability to selectively help areas or sectors. Add in the need to abide by EU regional development criteria, and our hands are tied on regional policy too.
More here:More here:
My piece in The Guardian "Brexit would help UK manufacturing survive in a global market" https://t.co/AhOZi24MlCMy piece in The Guardian "Brexit would help UK manufacturing survive in a global market" https://t.co/AhOZi24MlC
2.22pm BST2.22pm BST
14:2214:22
Our economics editor, Larry Elliott, says the Bank of England will be delighted that UK inflation remained at 0.3% last month.Our economics editor, Larry Elliott, says the Bank of England will be delighted that UK inflation remained at 0.3% last month.
He explains:He explains:
For the Bank of England, lower than expected inflation is a double bonus. On the one hand, it increases the spending power of households and so boosts growth. On the other, it provides greater wriggle room before the government’s 2% inflation target comes under serious threat.For the Bank of England, lower than expected inflation is a double bonus. On the one hand, it increases the spending power of households and so boosts growth. On the other, it provides greater wriggle room before the government’s 2% inflation target comes under serious threat.
With the referendum making the outlook so uncertain, the extra leeway will be extremely welcome in Threadneedle Street.With the referendum making the outlook so uncertain, the extra leeway will be extremely welcome in Threadneedle Street.
Here’s Larry’s analysis:Here’s Larry’s analysis:
Related: Inflationary pressures building despite stable May dataRelated: Inflationary pressures building despite stable May data
1.43pm BST1.43pm BST
13:4313:43
Here comes the US retail sales figures for May....Here comes the US retail sales figures for May....
...and they’ve beaten expectations, with sales growing by 0.5% during the month....and they’ve beaten expectations, with sales growing by 0.5% during the month.
That suggests American consumers are continuing to spend, and haven’t been spooked by the latest twists in the race to succeed president Obama, or by the Brexit campaign.That suggests American consumers are continuing to spend, and haven’t been spooked by the latest twists in the race to succeed president Obama, or by the Brexit campaign.
Solid beat. Retail sales control group rises 0.4% (vs. 0.3% expected). And last month revised from 0.9% to 1.0%.Solid beat. Retail sales control group rises 0.4% (vs. 0.3% expected). And last month revised from 0.9% to 1.0%.
However.... it’s partly due to more expensive gasoline; fuel spending jumped by 2.1%, reflecting higher price at the pumpsHowever.... it’s partly due to more expensive gasoline; fuel spending jumped by 2.1%, reflecting higher price at the pumps
1.18pm BST1.18pm BST
13:1813:18
The boss of French insurance group Axa has gone public with his concerns about next week’s referendum.The boss of French insurance group Axa has gone public with his concerns about next week’s referendum.
Axa CEO Henri de Castries told a conference in Paris that the chances of Brexit are now “extremely high”. It would leave investors strugging to navigate “a true landscape of uncertainties”, he warned.Axa CEO Henri de Castries told a conference in Paris that the chances of Brexit are now “extremely high”. It would leave investors strugging to navigate “a true landscape of uncertainties”, he warned.
De Castries added that the future is uncertain, even if Britain votes to stay in the EU (via Bloomberg):De Castries added that the future is uncertain, even if Britain votes to stay in the EU (via Bloomberg):
“If they remain, the situation isn’t simple either, and this is underestimated by lots of people.”“If they remain, the situation isn’t simple either, and this is underestimated by lots of people.”
Axa CEO Warns There’s an ‘Extremely High’ Probability of #Brexit https://t.co/ap4bYvDGem via @business #eureferendumAxa CEO Warns There’s an ‘Extremely High’ Probability of #Brexit https://t.co/ap4bYvDGem via @business #eureferendum
1.08pm BST1.08pm BST
13:0813:08
Stresses in the financial markets have jumped to their highest level since late February:Stresses in the financial markets have jumped to their highest level since late February:
BofA's measure of global financial market stress is surging. https://t.co/YSjU3HOvxN via @cecileva pic.twitter.com/wdnbp4fnDTBofA's measure of global financial market stress is surging. https://t.co/YSjU3HOvxN via @cecileva pic.twitter.com/wdnbp4fnDT
12.45pm BST12.45pm BST
12:4512:45
Times City hack Simon English highlights how the mood has changed:Times City hack Simon English highlights how the mood has changed:
Just 1 in 10 bets taken in past 48 hours are backing Remain. Top stat from Sporting Index.Just 1 in 10 bets taken in past 48 hours are backing Remain. Top stat from Sporting Index.
12.10pm BST
12:10
UK borrowing costs keep falling
Britain’s borrowing costs are also hitting fresh all-time lows today.
The yield on UK 10-year gilts has slid to just 1.15% – which is the lowest borrowing rate on record.
That’s a sharp fall from the 1.21% yield yesterday. [yields, or interest rates, fall when the price of a bond rises]
At the start of 2015, Britain was paying 2% to borrow for a decade.
Leave campaigner Douglas Carswell claims that this shows that investors are relaxed about the prospect of Britain quitting the EU....
Bond markets looking good. Lot of international investors happy to buy UK gilts ahead of Brexit
However, falling bond yields is usually a sign that the City is worried – buying bonds as a way of protecting their cash.
David Miller, investment director at fund manager Quilter Cheviot, says the markets are worried about the referendum , rather than “looking good”....
Markets are in a strange state. Gilt yields are lower than any time since records began in 1729 and companies are issuing huge amounts of corporate debt in order to take advantage of low interest rates. Short term traders and long term investors are on the sidelines waiting for the referendum result.
Referendum uncertainty is damaging confidence and there is evidence of a slowdown in economic activity. Markets and social media amplify the daily headlines created by the politicians.
11.38am BST
11:38
Brexit panic drives London stock market to three-month lows
London’s stock market is plumbing new lows as traders continue to quake in the shadow of the EU vote.
The FTSE 100 has shed 77 points, or 1.3%, to 5967 – falling through the 6,000 point mark for the first time since late February.
Mike van Dulken of Accendo Markets says stock market bulls are racing to the exits, before the UK makes its own exit decision:
“Equity indices are extending their losses, fearful of a now heightened prospect that the UK votes to leave the European Union, worsening an already fragile global growth situation by delivering an economic and political blow to a struggling Eurozone.
And Chris Beauchamp of IG says traders are reacting to the latest polls, and the Sun newspaper’s decision to back the Leave campaign.
Panic appears to be gripping markets as the headlines fill up with references to a possible Brexit, with the Sun’s declaration for Brexit emblematic of the worry that the Remain campaign has lost a crucial segment of the population....
The move in the polls has been matched by a noticeable shift in the IG Brexit binary, with clients now thinking that the chance of the UK voting to leave has now hit 40.5%, up from the low 30s yesterday.
A Brexit isn’t fully priced in, though, Beauchamp adds:
What is interesting is, despite the sharp selloff in sterling in recent days, the pound is still holding on above $1.41.. Either this is a symptom of limited volumes as traders abandon the field, or a sign that the market still thinks the status quo will win out in the end.
European stock markets are also deep in the red.
France’s CAC is down 1.2%, while the German DAX is down 0.7%, as traders continue to dump shares and buy bonds (which is why German 10-year bond yields are now negative)
This chart shows why Brexit would have such an impact on the European political landscape:
4 new polls suggest Britain will back #Brexit. Here's how the first 100 days would look https://t.co/p0QIyU6t5l pic.twitter.com/5btVpEGcD7
Updated
at 11.40am BST
10.56am BST
10:56
Bank of England pumps £2.5bn into City to fight Brexit fears
Breaking: The Bank of England had allocated almost £2.5bn of cash to City firms to help them handle any Brexit-related panic.
This is the result of the first special liquidity operation run by the BoE, ahead of next week’s EU referendum.
The auction was designed to prevent the money markets running dry, if panic broke out over the referendum. Banks can swap assets for ready cash, and only have to repay the funds in six months.
But the take-up is actually quite modest, and the lowest for any such market operation since February. Last week, for example, firms took around £3.2bn of liquidity via a regular operation.
Reuters has the details:
So, this suggests the City is still operating as normal, despite the recent tumble in the pound and in share prices.
Here’s some instant reaction, from Sky News’s Ed Conway:
The @bankofengland just did first of its #EURef related liquidity operations. Pumped £2.5bn into market. Bit lower than previous repos
And from private equity firm Pegasus:
Bank of England allotted £2.5bn of 6 month repo to UK Banks this morning....Brexit related liquidity push kicking in.
Updated
at 11.01am BST
10.32am BST
10:32
The inflation report didn’t have much impact on the pound, which is still down around 1% against the US dollar.
Joshua Raymond of City broker XTB.com says next week’s EU referendum is still dominating the markets.
May’s inflation reading is unlikely to have any impact at the Bank of England, who remain expected to keep interest rates on hold for the remainder of the year.
As such, the reaction to this data in the pound was minimal, and the main driver for pound buyers or sellers right now continues to be the uncertainty over a potential Brexit, with the latest polls showing a strengthening in popularity for the leave camp.
10.16am BST
10:16
With inflation this low, there’s no chance that the Bank of England will raise interest rates when policymakers meet on Thursday.
Ian Stewart, chief economist at Deloitte, reckons borrowing costs will remain extremely low for many months:
“Inflation is up from its all-time lows but is still way too low.
The fight against low inflation continues. The era of ultra-low interest rates has much further to run.
10.11am BST
10:11
Maike Currie, investment director for personal investing at Fidelity International, has summed up today’s inflation data:
“After falling to 0.3% in April, inflation remains unchanged in May, below the 15-month peak of 0.5% recorded in March this year. Rising oil prices pushing up the cost of filling up your petrol tank coupled with eating out at restaurants and the price of smartphone services were the main upward drivers.
This was offset by falls in clothing and food prices. Since the beginning of the year, the pound has been markedly weaker, which is also likely to have pushed up prices.
10.01am BST
10:01
UK house price inflation cools
UK house price inflation has also slowed down, perhaps reflecting economic uncertainty ahead of the EU referendum.
The ONS reports that the cost of average house rose by 8.2% annually in April, down from 8.5% in March.
Prices rose fastest in London (+14.5%) and the East of England (13.6%), but only rose by 0.1% in the North East.
And there are some stark regional differences, with the Welsh town of Merthyr Tydfil suffering the biggest fall in house prices.
Annual house price inflation hits 27.3% in the City of London. And -11.1% in Merthyr Tydfil. @ONS: pic.twitter.com/JNATVa11Qd
9.55am BST
09:55
The inflation report also shows that UK consumers have been hit by the recent recovery in the oil price.
Transport costs climbed 0.9% in May, partly due to a 3p rise in a litre of diesel. Rising sea fares also had an upward impact, picking up slightly in 2016 after falling a year ago.
9.42am BST
09:42
Why UK inflation stayed low
Clothing and footwear prices fell by 0.2% between April and May this year, helping to keep the cost of living low.
The downward contribution came from a variety of clothing but particularly children’s outerwear.
Food and non-alcoholic beverage prices fell by 0.4% between April and May 2016.
The downward contribution came from a variety of food product groups, most notably vegetables and confectionery.
Recreation and culture prices, fell by 0.4%:
The downward contribution came mainly from games, toys and hobbies (particularly computer games) with prices falling between April and May 2016 compared with a rise last year.
9.37am BST
09:37
At just 0.3%, Britain’s inflation rate remains stubbornly low below the Bank of England’s 2% target.
Just in case you were getting your hopes up that we might see a bit more of it. UK inflation unchanged at 0.3%. pic.twitter.com/gNLAJ3rinz