Housebuilders slump on Brexit; pharmas, sin stocks gain

Verdict Financial analyst Daoud Fakhri said: “Demand for home finance will inevitably be dented, as consumers react to the uncertainty generated by the vote by postponing major spending decisions.

“The London market, dominated by overseas property investors, will also be particularly badly hit, with many of those investors seeking to reduce their exposure to the UK. A chain reaction will mean that property values in all price bands will experience reductions.”

Fakhri said the Bank of England may decide to cut the base rate to forestall a negative shock to the economy, which could help stabilise the current price regimes. On the other hand, the BoE might decide to raise rates if sterling continues to slump against the US dollar, which could feed through to more expensive home loans and further dampen activity.

Analysts at Whitman Howard took a different stance, however, saying they were not altering their forecasts on UK housebuilders on the back of the Leave vote. “We believe that government support and their own financial/land resources will ensure a continuation of growth in value,” they said.

On the upside, pharmaceuticals – defensive stocks whose performance is not tied to the overall economy – performed well, with the likes of GlaxoSmithKline and AstraZeneca posting healthy gains.

Shares in tobacco companies, or so-called sin stocks, also rose, with internationally-orientated Imperial Brands and British American Tobacco both in the black.

Top performing sectors so far today

Technology Hardware & Equipment 1,314.80 +5.24%

Pharmaceuticals & Biotechnology 12,426.78 +2.80%

Personal Goods 28,065.38 +2.02%

Tobacco 51,518.73 +1.90%

Health Care Equipment & Services 7,354.64 +1.24%

Bottom performing sectors so far today

Real Estate Investment Trusts 2,744.17 -15.10%

Real Estate Investment & Services 2,387.55 -13.80%

Life Insurance 6,175.31 -12.76%

Fixed Line Telecommunications 4,373.63 -12.52%

Financial Services 8,157.48 -10.57%