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Jul 6, 2016

European Markets at Close Report, by CNBC on July 6, 2016: Europe Tumbles at Close Amid Brexit Fears; Pound Tumbles to 31-Year Low

European stocks finished trade sharply lower on Wednesday amid continued political and economic uncertainty in the European Union (EU) following the Brexit vote.
The European FTSEurofirst 300 ended 1.6 percent provisionally, with all sectors posting solid losses by the close. 
Looking at individual bourses, the U.K.'s FTSE 100 ended 1.2 percent down. France's CAC and Germany's DAX fell even further, off around 1.8 and 1.7 percent respectively.

Brexit fallout continues: UK real estate in focus

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Growing anxiety about the fallout of the U.K.'s vote to leave the EU has continued to plague markets. U.S. stocks opened lower, as growth concerns continued to weigh on sentiment. Markets in Asia were trading mostly lower on Wednesday, as investors scurried into safe-haven plays on global growth concerns, sending bond yields to record lows.
As a result of the growing uncertainty, the British pound also dropped to a fresh 31-year low amid Brexit concerns, trading at $1.2962 around 2.30 p.m. London time after dropping as low as $1.2796 earlier.
U.K. real estate funds are in focus after Standard LifeAviva and M&G Investments all halted redemptions this week. Shares of both Standard Life and Aviva were sharply lower. Aviva released a statement on Wednesday saying that it aims to increase its dividend pay-out ratio next year, adding that it was too soon to judge the impact of Brexit on the insurer.
Britain's housebuilders were in also negative territory. Shares of Taylor Wimpey and Bovis Homes were among those trading sharply lower.
Elsewhere in the U.K., Tesco slumped over 8.5 percent after HSBC cut its price target for the stock. The bank also slashed its price target forWM Morrison and J Sainsbury, sending shares in the supermarket giants sharply lower.
Budget airline EasyJet saw shares under pressure despite reporting a rise in passenger numbers for June. And British Airways owner IAG said passenger traffic also grew in June but premium traffic remained flat. Shares were off 7 percent. Meanwhile, Barclays cut its price target forRyanair, sending shares sharply lower.
In other news, U.K. Home Secretary Theresa May has taken the lead in the race to find a new Conservative party leader and British prime minister. May came top in a first round of voting on Tuesday, Liam Fox was eliminated from the race with the fewest amount of votes and Stephen Crabb pulled out of the leadership race leaving May, Andrea Leadsom and Michael Gove to face another round of voting Thursday.

Top performers: Precious metal firms, BMPS

Precious metals miners Fresnillo and Randgold Resources were some of Europe's best performers—up over 6 and 3.5 percent respectively—as gold rose to its highest level in more than two years, boosted by the risk-off sentiment in markets.
On the oil front, crude prices fell back into negative territory as concerns over the global economy and a stronger dollar capped gains in the market. Brent and U.S. crude fell into the red, hovering around $47.50 and $46.30 respectively. Tullow Oil shares sank to the bottom of the STOXX 600, off over 14 percent after it announced a $300 million bond offering to fund investment in its West and East Africa assets.
Elsewhere, Italian banks remain in focus for investors. Banca Monte dei Paschi di Siena shares have had a volatile couple of sessions this week after the European Central Bank asked BMPS to slash its bad debts by over 40 percent in three years. Late Tuesday, market watchdog Consob said short selling of BMPS shares would be banned in Wednesday's trading session, Reuters reported.
Shares of BMPS rose more than 14 percent before paring some gains, currently up 8 percent. The lender is looking into the possibility of a 2-3 billion euro capital increase guaranteed by the state. 
A handful of other European lenders were higher, however most banking stocks were trading in the red, including Britain's Royal Bank of ScotlandLloyds and Barclays, which all fell after Mediobanca Securities cut its price target on each stock.
In other key stock moves, Telecom Italia was down over 10 percent after French telecom player Iliad announced it was entering the Italian market. JPMorgan also cut its price for Telecom Italia shares.