London close: Stocks gain but analysts expect post-Brexit selloff to continue

The FTSE ended up 2.45% to 6,128.72 and the pound rose 0.65% against the dollar at $1.33.

“Today has seen a welcome reprieve from the incessant fear and risk aversion that has dominated financial markets since Friday’s unexpected referendum result,” IG market analyst Joshua Mahony said.

“The question on everyone’s lips is whether we have seen an end to the selling, with many seeing current prices as an opportunity to buy their favourite firms at a temporary discount. This selloff is unlikely to be over and perhaps the only thing that will truly raise risk appetite for good will be a faint glimmer of hope that we could see a second referendum.”

In the latest news following Britain’s decision to leave the European Union, chancellor George Osborne reiterated that the government would have to increase taxes and cut spending to deal with the economic fallout of Brexit.

European Commission president Jean-Claude Juncker said Britain must “clarify its position” on the terms of its departure from the EU as soon as possible. He said there would be no informal talks with the UK before its invoked Article 50 of the 2007 Treaty of Lisbon that starts formally the exit process.

“I want the UK to clarify its position. Not today, not tomorrow at 9am, but soon. We cannot allow ourselves to remain in a prolonged period of uncertainty,” he said.

Meanwhile, an industry survey showed UK retail sales growth slowed ahead of last Thursday’s EU referendum. The Confederation of British Industry’s monthly retail sales balance for June fell to +5 from +7 in May. The survey was conducted between 26 May and 14 June.

In the US, the Commerce Department said first quarter gross domestic product increased 1.1%, beating consensus expectations of 1% growth and higher than the previously-estimated 0.8% increase. In the final quarter of 2015, real GDP rose 1.4%.

“Fed Chair Janet Yellen will be largely content with the GDP figures released today that reveal a US economy in decent health amid swirling global uncertainty,” said Dennis de Jong, managing director at UFX.com.

“The UK’s decision to vote to leave the EU last week has triggered market turmoil not seen since the dark days of 2008 and, while the US is likely to avoid bearing too much of the global burden, a strengthening dollar against the pound will have some knock-on effects."

US house price growth slowed just a touch in April, according to the S&P/Case-Shiller National Home Price Index, and the outlook is uncertain following Brexit and ahead of the US elections. The 20-City Composite Index was up 5.4%, down from 5.5% in March but in line with economists’ estimates.

US consumer confidence improved in June with the Conference Board’s sentiment index rising to 98.0 from 92.4 the previous month, exceeding analysts’ estimates for a reading of 93.5.

Oil prices advanced with Brent crude up 1.2% to $47.76 per barrel and West Texas Intermediate up 1.5% to $47.06 per barrel. Prices were supported by the possibility that oil and gas workers in Norway could go on strike from Saturday if they do not agree a wage deal.

On the corporate front, Legal & General shares jumped after it announced the appointment of a new group chairman on Tuesday, confirming former Whitehall mandarin John Kingman as taking the up the post.

Housebuilders recovered from the initial shock of Britain’s vote to leave the European Union even as Goldman Sachs said it now expects new build volumes in the UK to drop 10% and house prices to fall by 2% and 5% in 2016 and 2017 respectively. Shares in Taylor Wimpey and British Land rose.

Miners were lower as the price of the gold fell after investors sought a safe haven in the two days since the UK voted to leave the EU. Fresnillo and Randgold Resources were among the fallers.

Online grocer Ocado gained as the company said revenues and earnings grew in the first half of the year, reporting gross sales of £582.9m for the 24 weeks to 15 May on Tuesday, a 13.9% rise on £511.9m in the comparative period last year.

Market Movers

FTSE 100 (UKX) 6,128.72 2.45%
FTSE 250 (MCX) 15,504.41 3.58%
techMARK (TASX) 3,049.80 3.23%

FTSE 100 - Risers

Hargreaves Lansdown (HL.) 1,150.00p 8.90%
Associated British Foods (ABF) 2,555.00p 8.72%
Land Securities Group (LAND) 989.00p 8.68%
Next (NXT) 4,745.00p 8.23%
Legal & General Group (LGEN) 178.00p 7.88%
ITV (ITV) 166.00p 7.79%
Prudential (PRU) 1,190.50p 7.74%
Barratt Developments (BDEV) 381.00p 7.51%
Lloyds Banking Group (LLOY) 54.95p 7.43%
Sage Group (SGE) 611.50p 6.72%

FTSE 100 - Fallers

Fresnillo (FRES) 1,449.00p -2.29%
Antofagasta (ANTO) 415.20p -1.87%
Randgold Resources Ltd. (RRS) 7,965.00p -0.87%
Paddy Power Betfair (PPB) 7,990.00p -0.87%
Whitbread (WTB) 3,391.00p -0.67%
Worldpay Group (WI) (WPG) 256.20p -0.50%
Royal Bank of Scotland Group (RBS) 173.80p -0.29%
Rexam (REX) 638.50p -0.23%
Carnival (CCL) 3,259.00p -0.15%
Kingfisher (KGF) 315.70p 0.32%

FTSE 250 - Risers

Circassia Pharmaceuticals (CIR) 94.00p 14.29%
Daejan Holdings (DJAN) 4,961.00p 12.47%
AO World (AO.) 135.40p 12.37%
IP Group (IPO) 134.70p 11.88%
Stagecoach Group (SGC) 218.80p 10.78%
NCC Group (NCC) 250.10p 10.27%
TR Property Inv Trust (TRY) 265.00p 9.64%
McCarthy & Stone (MCS) 167.30p 9.56%
Zoopla Property Group (WI) (ZPLA) 266.00p 9.02%
Virgin Money Holdings (UK) (VM.) 223.30p 8.82%

FTSE 250 - Fallers

Shawbrook Group (SHAW) 140.00p -14.16%
Centamin (DI) (CEY) 123.70p -4.92%
Acacia Mining (ACA) 423.50p -3.75%
SSP Group (SSPG) 274.50p -2.76%
CLS Holdings (CLI) 1,275.00p -2.15%
Dunelm Group (DNLM) 767.50p -1.54%
Crest Nicholson Holdings (CRST) 343.00p -0.58%
Hastings Group Holdings (HSTG) 165.00p -0.54%
Playtech (PTEC) 772.50p -0.32%
PZ Cussons (PZC) 317.60p -0.25%