London midday: FTSE plunges on Brexit uncertainty, fall in oil prices

The FTSE 100 plunged on Friday as Brexit uncertainty increased and oil prices dropped.

London’s top tier index fell 1.61% to 6,131.38 points at the midday mark, just 31 points above a level not seen since the third week of May.

With Britain’s European Union referendum fast approaching, investors turned their focus to the latest news on the issue. Britain votes on its EU membership on 23 June.

The Labour Party on Friday claimed that leaving the EU could lead to £18m of spending cuts and tax rises. Shadow Home Secretary Andy Burnham also warned there was a "very real prospect" of Britain voting to leave the EU.

“ It is clear that there has been a big shift in sentiment around the Brexit over the past 10 days, with poll after poll proving that perhaps it will not be such a one sided affair as many presumed,” said IG market analyst Joshua Mahoney.

“Unless polls begin to turn around and show an overwhelming bias towards ‘remain’ it is likely that the next two weeks will be characterised by uncertainly and risk aversion. While IG traders still see a74% chance that the UK will remain in the EU, this is gradually falling to reflect the perceived shift in emphasis over recent polls.”

The pound fell 0.23% against the dollar at $1.4425 at 1124 BST.

An appreciation of the dollar against the pound and the euro pushed oil prices lower with US crude falling below $50 a barrel. A stronger dollar is seen to weaken demand for crude as it makes imports bought in the currency more expensive.

At 1129 BST Brent crude declined 1.2% to $51.33 per barrel and West Texas Intermediate dipped 1.4% to $49.86 per barrel. Oil prices had rallied earlier in the week as supply disruptions continued, easing worries about a global crude glut.

In economic data, UK construction output figures came in better-than-expected. Output rose 2.5% month-on-month in April, beating analysts’ estimates for a 1.2% increase and following a 3.6% decline in March, the Office for National Statistics revealed.

On an annualised basis construction output fell 3.7% in April - although it was better than the 4.9% drop expected and the previous month’s 4.5% slide.

A survey by the Bank of England and TNS showed 41% of Britons believe the BoE will raise interest rates over the next 12 months, compared to 38% in a February survey. The percentage of those who believe rates are unlikely to remain unchanged fell to 32% from 36% in February.

Still to come, the University of Michigan’s consumer confidence index will be released at 1500 BST.

On the corporate front, Tesco shares declined after confirming the proposed sale of its Kipa and Giraffe businesses, as it continues to slim down and focus on its core retail business.

Schroders was in the red as Reuters reported that the company appointed Shigesuke Kashiwagi, former chief financial officer of Nomura Holdings, as its president and country head of Japan.

J Sainsbury has announced it will appoint its chief financial officer John Rogers as chief executive of Home Retail Group on completion of its £1.4bn takeover. Rogers will replace John Walden, who is stepping down from the company. The takeover deal is expected to be completed in the third quarter.

BP and Det norske oljeselskap said they were creating of Aker BP ASA, an independent oil and gas company combining the assets and expertise from both companies' Norwegian exploration and production operations to form the largest Norwegian independent oil and gas producer. The $1.3bn share deal is aimed at cutting costs, increasing profitability and challenging Statoil's Norwegian offshore dominance.

Market Movers

FTSE 100 (UKX) 6,131.38 -1.61%
FTSE 250 (MCX) 16,870.66 -1.41%
techMARK (TASX) 3,050.11 -1.44%

FTSE 100 - Risers

Randgold Resources Ltd. (RRS) 6,650.00p 0.38%
Fresnillo (FRES) 1,209.00p -0.17%
Rexam (REX) 636.50p -0.31%
Royal Dutch Shell 'B' (RDSB) 1,790.50p -0.33%
SABMiller (SAB) 4,281.00p -0.34%
Royal Dutch Shell 'A' (RDSA) 1,777.50p -0.39%
Rolls-Royce Holdings (RR.) 597.00p -0.42%
Johnson Matthey (JMAT) 2,957.00p -0.61%
Whitbread (WTB) 4,082.00p -0.63%
Merlin Entertainments (MERL) 424.30p -0.70%

FTSE 100 - Fallers

Barclays (BARC) 169.95p -3.46%
Mondi (MNDI) 1,306.00p -3.40%
easyJet (EZJ) 1,440.00p -3.23%
Prudential (PRU) 1,251.00p -2.99%
Royal Bank of Scotland Group (RBS) 215.80p -2.79%
Glencore (GLEN) 134.10p -2.79%
BHP Billiton (BLT) 836.70p -2.72%
Schroders (SDR) 2,559.00p -2.70%
Sky (SKY) 929.50p -2.67%
Admiral Group (ADM) 1,920.00p -2.64%

FTSE 250 - Risers

Vectura Group (VEC) 163.30p 2.38%
Lookers (LOOK) 135.40p 1.65%
G4S (GFS) 187.70p 1.35%
Genus (GNS) 1,523.00p 1.13%
Euromoney Institutional Investor (ERM) 950.50p 1.12%
Homeserve (HSV) 475.30p 0.70%
Telecom Plus (TEP) 1,031.00p 0.59%
UK Commercial Property Trust (UKCM) 80.70p 0.50%
Caledonia Investments (CLDN) 2,369.00p 0.42%
Acacia Mining (ACA) 346.90p 0.38%

FTSE 250 - Fallers

Pagegroup (PAGE) 372.50p -6.64%
Hays (HAS) 126.20p -6.52%
Ocado Group (OCDO) 245.90p -4.84%
Restaurant Group (RTN) 360.00p -4.76%
Evraz (EVR) 125.80p -4.70%
Essentra (ESNT) 572.50p -4.58%
OneSavings Bank (OSB) 312.00p -4.41%
Countrywide (CWD) 353.40p -4.23%
Thomas Cook Group (TCG) 66.05p -3.93%
International Personal Finance (IPF) 277.10p -3.85%