Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Banks Get Clobbered Again, As Yields Fall Further

Published 27/06/2016, 10:30
Updated 03/08/2021, 16:15

The fallout from last weeks “Brexit” vote continues to reverberate around global markets with the pound continuing to remain under pressure as concerns about the effects of the vote on the UK economy, dysfunctional UK politics, and the broader effects on Europe, dominate sentiment.

This morning’s comments from UK Chancellor George Osborne appear to have helped settle things down somewhat as he ruled out the prospect of an emergency budget in the short term and insisted that there would be no triggering of article 50 until such times as there was “clear view” on the future.

While the Chancellor’s measured tone appears to have helped alleviate concerns about a rudderless UK ship, concerns about the banking sector continue to be a pressure point for investors, as dark threats about the removal of financial pass-porting continue to weigh, and yields continue to fall.

This has prompted further selling of banking stocks which have continued to remain under pressure with Royal Bank of Scotland (LON:RBS) and Barclays (LON:BARC) continuing their Friday slides.

European banking stocks don’t appear to be faring any better as the prospect of continued uncertainty about a future relationship between the UK and the EU and the linkages between the respective banking sectors continue to fuel uncertainty about the stability of the sector.

Deutsche Bank (DE:DBKGn) has once again hit new record lows while Italian banks have also remained under pressure.

Spanish banks have also slid back despite initially opening higher after the weekend election saw Mariano Rajoy once again fall short of an overall majority, though his party did increase the number of seats from the vote in December.

EasyJet (LON:EZJ) shares have also come under pressure sliding sharply and hitting a three year low after the company warned this morning on profits in the wake of last week’s Brexit vote.

Housing stocks have also slid further led by Taylor Wimpey (LON:TW) and Barratt Developments (LON:BDEV) while London estate agent Foxtons (LON:FOXT) warned that the London property market could well see a prolonged downturn as a result of last week’s vote, as their share price hit their lowest levels since the IPO in 2013, down over 60% from when it.

On the plus side gold miners have continued to benefit as a result of continued resilience in the gold price with Fresnillo (LON:FRES) and Randgold Resources (LON:RRS) leading the gainers.

Defensive stocks have also started to see some bids come in with the big global multinationals finding a few buyers, as Diageo (LON:DGE), Unilever (LON:ULVR) and Reckitt Benckiser (LON:RB) all benefit from a weaker pound.

The pound has continued to come under pressure while the 10 year gilt yield has fallen below 1% for the first time ever in a sign that the market is pricing in the prospect of significant further easing measures from the Bank of England in the coming weeks and months.

The Dow Jones is expected to open 115 points lower at 17,285

The S&P500 is expected to open 16 points lower at 2,021

DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.

No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

Original post

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.