Europe close: Brexit worries take their toll
Losses in lenders' shares weighed on the main European equity benchmarks, as investors continued to move to factor-in a greater risk of Brexit as the latest poll results continued to roll-in.
The pan-European Stoxx 600 finished down by 1.84% or 6.12 points at 326.80, with banks leading industry decliners, ending down by 2.7%.
In London, the FTSE 100 lost 1.16% to finish at 6,044.97, Frankfurt’s DAX was lower by 1.80% at 9,657.44 and in Paris the CAC 40 slipped 1.85% to 4,227.02.
An ORB poll for The Independent, released early in the evening on 10 June, put support for the 'Leave' camp. at ten full percentage points ahead of 'Remain'. Soon afterwards, Betfair announced the chances of the UK remaining inside the EU had shifted from 75.0% at the end of the previous week to 68.5%.
The declines in Europe followed on from a dire day in Asia, where Japan’s Nikkei 225 ended the session in the red by 3.51%, alongside another 0.75% drop in the US dollar/yen to 106.17.
“Asian markets were tattered as investors are concerned about the spike in volatility, and this has impacted the mood in Europe,” noted Think Forex UK chief market analyst Naeem Aslam.
“There are a few reasons for this - the strength in the Japanese yen has spooked investors over in Asia, while, the [Brexit] referendum is pressing investor appetite for riskier assets in Europe, and traders are wary about the upcoming Fed meeting this week in the US.”
Investors were increasingly seeking shelter, rushing to both the safe-haven yen as well as government bonds in recent sessions, with prices pushing higher and yields much lower for the latter.
Falling bond yields are increasingly highlighting concerns over the profitability of the banking sector, with shares in Banco Popolare di Milano down 10.08% and Banca Monte dei Paschi di Siena falling 9.14% in Italy.
Germany’s Commerzbank lost 3.99% and in France, Credit Agricole was off 3.34%.
The ten year German bund yield was up by less than one basis point on Monday at 0.024%, having hit fresh record lows of 0.01% in Friday trading.
Crude prices were also declining, with Brent crude last off 0.58% at $50.25 and West Texas Intermediate down 0.574% at $48.79.
In corporates, security firm G4S was down 5% after it emerged that Omar Matteen, the attacker in Sunday’s shooting at a Florida nightclub, was an employee.
The company told the market it is cooperating with law enforcement in their investigation of the shooting, which left at least 50 people dead.
Deutsche Bank lost 3%, with a Frankfurt court expected to rule on carousel trade in emission certificates, with two Deutsche Bank employees accused of evading taxes when buying and selling certificates.
The world’s largest cement maker LafargeHolcim lost 3.84% after it said it has identified another nine countries where it will make divestments it it can achieve favourable valuations, though it did not name the locations.
Julius Baer was off 1.65% after chief executive Boris Collardi told Swiss newspaper Schweiz am Sonntag that the company will focus on organic growth this year, as well as Asia, and he is confident it will reach new money growth targets of 4-6%.