London midday: Stocks waver as investors continue to weigh post-Brexit risks

Bank of England Governor Mark Carney suggested last week that an interest rate cut is likely after Britain voted to leave the European Union. There is also speculation the European Central Bank may boost stimulus measures to cushion fallout of Brexit.

“Although short term stock market gains may be realised as expectations inflate over central bank intervention, the key fundamentals and ongoing concerns which have punished global stocks still remain intact in the background,” said FXTM research analyst Lukman Otunuga.

“It should be kept in mind that fears over the global economy have elevated while the persistent financial market instability has created an era of central bank caution.”

Chancellor George Osborne now plans to cut corporation tax to ensure businesses keep investing in the UK after it opted to leave the EU. Osborne told the Financial Times he would cut the tax rate to below 15% from the current 20%, which would make it the lowest of any major economy.

The OECD, however, said that the UK is unlikely to entice business by becoming a tax haven after Brexit.

The pound was up 0.13% against the dollar to $1.3284 at 1140 BST.

Meanwhile, a survey showed that eurozone investor confidence has fallen to the lowest level since January after Brexit. Sentix’s forward-looking headline index for measuring investor confidence in the eurozone fell to +1.7 points in July from +9.9 in June, missing analysts’ estimates of +5.0.

Chief eurozone economist at Pantheon Macroeconomics, Claus Vistesen, said he believes the ECB's response to Brexit will be an extension of quantitative easing, which could "come as a disappointment to markets".

"This survey gives the first indication of the hit to sentiment from the Brexit fallout, and while further weakness next month is possible, the initial fall is smaller than we feared."

A separate report showed the pace of UK construction slowed more than expected in June. The Markit/CIPS UK construction purchasing managers’ index fell to 46.0 from 51.2 in May, marking its lowest level in seven years and below the 50.0 threshold that separates contraction from expansion for the first time since April 2013. Economists had been expecting a reading of 50.5.

In commodities, oil prices rallied the after energy minister of Saudi Arabia and the secretary general of producer club OPEC agreed that global oil markets were heading towards balance. Brent crude rose 0.51% to $50.61 per barrel and West Texas Intermediate increased 0.38% to $49.18 per barrel at 1133 BST.

Metal prices were also on the rise with gold up 1.06%, sliver up 4.22% and copper up 1.04% on the Comex.

The increase in commodity prices gave mining stocks a lift with Fresnillo, Randgold Resources and Antofagasta were the biggest risers on the FTSE 100.

Going the other way, housebuilders were the biggest fallers on the back of weaker UK construction PMI. Persimmon, Taylor Wimpey and Barratt Developments were in the red.

Commercial real estate developers British Land and Land Securities were also lower after Liberum said risks surrounding the sector have increased and downgraded net asset value by 10%.

Moneysupermarket slumped after Barclays downgraded its recommendation on shares following the "jolt" of the UK referendum from 'overweight' to 'equalweight' and cut the target price from 390p to 260p.

Rightmove was another faller as Barclays lowered its recommendation on shares from 'overweight' to 'underweight' and reduced its target price from 4,550p to 4,300p.

Clarkson declined after saying full year profits will be "materially lower" in 2016 as a result of lower freight rates, quiet capital markets and weak investor confidence.

Market Movers

FTSE 100 (UKX) 6,567.98 -0.15%
FTSE 250 (MCX) 16,174.17 -1.77%
techMARK (TASX) 3,217.64 -0.52%

FTSE 100 - Risers

Fresnillo (FRES) 1,875.00p 6.53%
Randgold Resources Ltd. (RRS) 9,175.00p 4.56%
Antofagasta (ANTO) 488.60p 4.05%
Glencore (GLEN) 162.25p 4.04%
Anglo American (AAL) 784.20p 3.46%
BHP Billiton (BLT) 971.60p 3.36%
Rio Tinto (RIO) 2,395.00p 2.13%
British American Tobacco (BATS) 4,936.50p 1.18%
SSE (SSE) 1,588.00p 1.15%
Diageo (DGE) 2,126.50p 0.93%

FTSE 100 - Fallers

British Land Company (BLND) 575.00p -5.51%
Land Securities Group (LAND) 984.50p -5.25%
Persimmon (PSN) 1,469.00p -4.61%
Marks & Spencer Group (MKS) 307.00p -4.09%
Taylor Wimpey (TW.) 133.70p -4.02%
Hammerson (HMSO) 511.50p -3.94%
Barratt Developments (BDEV) 400.00p -3.61%
Intu Properties (INTU) 282.20p -3.19%
Berkeley Group Holdings (The) (BKG) 2,570.00p -3.17%
Standard Life (SL.) 293.30p -2.23%

FTSE 250 - Risers

Hochschild Mining (HOC) 207.50p 5.60%
Kaz Minerals (KAZ) 136.10p 3.11%
Vedanta Resources (VED) 445.70p 3.00%
Acacia Mining (ACA) 474.10p 2.20%
Centamin (DI) (CEY) 144.80p 2.19%
Bodycote (BOY) 540.00p 2.08%
Polymetal International (POLY) 1,078.00p 1.79%
Evraz (EVR) 144.40p 1.62%
Cairn Energy (CNE) 221.20p 1.61%
Ibstock (IBST) 135.70p 0.97%

FTSE 250 - Fallers

Clarkson (CKN) 1,847.00p -16.24%
Moneysupermarket.com Group (MONY) 244.60p -11.05%
SIG (SHI) 107.00p -6.39%
Rightmove (RMV) 3,500.00p -6.37%
Allied Minds (ALM) 339.90p -5.82%
Polypipe Group (PLP) 239.80p -5.22%
Shawbrook Group (SHAW) 165.00p -4.95%
Diploma (DPLM) 797.00p -4.89%
AA (AA.) 237.50p -4.47%
Zoopla Property Group (WI) (ZPLA) 252.90p -4.46%