Brexit fears wipe £100bn off FTSE 100 in four days - business live

Graeme Wearden

from on 2016-06-14 16:07 (#1H4EZ)

Sterling and shares have slid as the City reacts to polls showing the Leave on track to win next week's referendum

4.49pm BST

Britain's stock market has hit a new three-month low as Brexit worries sweep through the City.

The blue-chip FTSE 100 index has closed down 121 points at 5923, its lowest level since late February, and its fourth day of heavy falls. That wipes around 30bn off its value.

Yet another day in the red for European markets has seen fears surrounding a potential Brexit continue to restrain risk appetite. The flight to safety is clearly evident in the foreign exchange markets, with money moving out of European currencies and into distant havens such as the yen and dollar.

With the news that Germany has joined the negative 10-year club, it is clear that investors are looking for a shelter from the storm that is moving in over the next two weeks.

4.30pm BST

In other news, retail magnate Sir Philip Green has just announced that he will attend a parliamentary hearing tomorrow on the collapse of BHS.

"I will do my best to answer all the questions put to me in an honest and open way" - Sir Philip Green confirms he will appear before MPs.

4.17pm BST

The Brexit referendum has come at a tricky time for the global economy.

Investors have been fretting for months about China's slowing economy, while the eurozone's weak recovery has been an ongoing sore.

Markets are already worried about slowing global growth and the inability of central bank policy to stem the decline. The June 23 EU referendum gives a specific date when all the market's troubles could come to a head.

Stocks and the British pound are being shunned in favour of havens like German and British bonds, the yields of which have struck new record lows. Expectations of weak global growth and ever-enduring easy monetary policy, likely to be reinforced at central bank meeting this week, is seeing a mass exit from equities and feeding demand for bonds, sending yields to record lows.

4.02pm BST

The London stock market has now suffer four days of steady losses, as the City has become steadily consumed by the looming EU vote.

''The risk of a potential 'Brexit' is dominating global markets today as we enter the home straight towards the influential EU referendum vote on 23 June.

Investors seem to have suddenly woken up to Brexit risk and have become nervous....

3.52pm BST

The London stock market has hit a new three-month low as it staggers towards the close with fresh losses.

The FTSE 100 index of blue-chip shares just fell as low as 5944 points, a loss of 101 points today.

3.35pm BST

Ouch. The pound just slipped below $1.41 for the first time in two months.

The TNS poll, showed Leave holding a 7-point lead, is clearly weighting on the markets.

Risk-off drift-off

3.33pm BST

Investors haven't been this worried about a sterling crisis since the aftermath of Lehman Brothers' collapse:

The cost of "insuring" against sharp movement in the appears to be back to financial crisis levels - up 4.3% today pic.twitter.com/xWW1nzyCWk

3.13pm BST

The pound just took another knock, after the TNS polling company reported that the Leave campaign have a "significant lead" in the run-up to the EU referendum.

TNS says that Leave is on 47% of the vote, with Remain trailing at 40% (with 13% of voters still undecided).

If the TNS poll just released is genuine then we have

Leave : 47% (+4)
Remain: 40% (-1)
Don't Know: 13% (-3)#Brexit

2.59pm BST

Insiders at the European Central Bank have revealed they would publicly pledge to backstop financial markets, in partnership with the Bank of England, should Britain vote to leave the European Union.

It's a clear signal that central bankers are preparing for Britain to shock the global markets and vote for Brexit.

The preparations illustrate the heightened state of alert ahead of the June 23 referendum, which will help determine Britain's future in trade and world affairs and also shape the EU. The pound and euro have lost value on fears a Brexit could tip the 28-member bloc into recession.

Such an announcement from the ECB would come on June 24 if an early-morning result showed that British voters had chosen to leave the EU, according to the sources. The aim is to underpin investor confidence across Europe and contain further market jitters.

ECB ready for Brexit: "There will be a statement to do whatever it takes to maintain adequate market liquidity" https://t.co/CmVCiGti2r

2.50pm BST

The US stock market has opened calmly, bring some order to proceedings after a volatile European session.

With all the attention on the Brexit, the central bank meetings this week have seemed to take a back seat. This makes sense, though. If the Fed hikes, and there is a Brexit? The Fed will have to backtrack, which will cost them credibility

2.31pm BST

Pro-Brexit economist Dr Gerard Lyons has written a piece for us, arguing that UK manufacturing could thrive outside the EU.

Here's a flavour:

In the future we can craft policy to suit domestic needs, not least the possibility of an industrial policy if we wanted it.

We could directly help sectors. The US, never accused of not being free market, directly targets help to strategic sectors, like autos. So too could we if we wished. EU state aid rules prevent the ability to selectively help areas or sectors. Add in the need to abide by EU regional development criteria, and our hands are tied on regional policy too.

My piece in The Guardian "Brexit would help UK manufacturing survive in a global market" https://t.co/AhOZi24MlC

2.22pm BST

Our economics editor, Larry Elliott, says the Bank of England will be delighted that UK inflation remained at 0.3% last month.

He explains:

For the Bank of England, lower than expected inflation is a double bonus. On the one hand, it increases the spending power of households and so boosts growth. On the other, it provides greater wriggle room before the government's 2% inflation target comes under serious threat.

With the referendum making the outlook so uncertain, the extra leeway will be extremely welcome in Threadneedle Street.

1.43pm BST

Here comes the US retail sales figures for May....

...and they've beaten expectations, with sales growing by 0.5% during the month.

Solid beat. Retail sales control group rises 0.4% (vs. 0.3% expected). And last month revised from 0.9% to 1.0%.

1.18pm BST

The boss of French insurance group Axa has gone public with his concerns about next week's referendum.

Axa CEO Henri de Castries told a conference in Paris that the chances of Brexit are now "extremely high". It would leave investors strugging to navigate "a true landscape of uncertainties", he warned.

"If they remain, the situation isn't simple either, and this is underestimated by lots of people."

Axa CEO Warns There's an 'Extremely High' Probability of #Brexit https://t.co/ap4bYvDGem via @business #eureferendum

1.08pm BST

Stresses in the financial markets have jumped to their highest level since late February:

BofA's measure of global financial market stress is surging. https://t.co/YSjU3HOvxN via @cecileva pic.twitter.com/wdnbp4fnDT

12.45pm BST

Times City hack Simon English highlights how the mood has changed:

Just 1 in 10 bets taken in past 48 hours are backing Remain. Top stat from Sporting Index.

12.10pm BST

Britain's borrowing costs are also hitting fresh all-time lows today.

The yield on UK 10-year gilts has slid to just 1.15% - which is the lowest borrowing rate on record.

Bond markets looking good. Lot of international investors happy to buy UK gilts ahead of Brexit

Markets are in a strange state. Gilt yields are lower than any time since records began in 1729 and companies are issuing huge amounts of corporate debt in order to take advantage of low interest rates. Short term traders and long term investors are on the sidelines waiting for the referendum result.

Referendum uncertainty is damaging confidence and there is evidence of a slowdown in economic activity. Markets and social media amplify the daily headlines created by the politicians.

11.38am BST

London's stock market is plumbing new lows as traders continue to quake in the shadow of the EU vote.

The FTSE 100 has shed 77 points, or 1.3%, to 5967 - falling through the 6,000 point mark for the first time since late February.

"Equity indices are extending their losses, fearful of a now heightened prospect that the UK votes to leave the European Union, worsening an already fragile global growth situation by delivering an economic and political blow to a struggling Eurozone.

Panic appears to be gripping markets as the headlines fill up with references to a possible Brexit, with the Sun's declaration for Brexit emblematic of the worry that the Remain campaign has lost a crucial segment of the population....

The move in the polls has been matched by a noticeable shift in the IG Brexit binary, with clients now thinking that the chance of the UK voting to leave has now hit 40.5%, up from the low 30s yesterday.

What is interesting is, despite the sharp selloff in sterling in recent days, the pound is still holding on above $1.41.. Either this is a symptom of limited volumes as traders abandon the field, or a sign that the market still thinks the status quo will win out in the end.

4 new polls suggest Britain will back #Brexit. Here's how the first 100 days would look https://t.co/p0QIyU6t5l pic.twitter.com/5btVpEGcD7

10.56am BST

Breaking: The Bank of England had allocated almost 2.5bn of cash to City firms to help them handle any Brexit-related panic.

This is the result of the first special liquidity operation run by the BoE, ahead of next week's EU referendum.

The @bankofengland just did first of its #EURef related liquidity operations. Pumped 2.5bn into market. Bit lower than previous repos

Bank of England allotted 2.5bn of 6 month repo to UK Banks this morning....Brexit related liquidity push kicking in.

10.32am BST

The inflation report didn't have much impact on the pound, which is still down around 1% against the US dollar.

Joshua Raymond of City broker XTB.com says next week's EU referendum is still dominating the markets.

May's inflation reading is unlikely to have any impact at the Bank of England, who remain expected to keep interest rates on hold for the remainder of the year.

As such, the reaction to this data in the pound was minimal, and the main driver for pound buyers or sellers right now continues to be the uncertainty over a potential Brexit, with the latest polls showing a strengthening in popularity for the leave camp.

10.16am BST

With inflation this low, there's no chance that the Bank of England will raise interest rates when policymakers meet on Thursday.

Ian Stewart, chief economist at Deloitte, reckons borrowing costs will remain extremely low for many months:

"Inflation is up from its all-time lows but is still way too low.

The fight against low inflation continues. The era of ultra-low interest rates has much further to run.

10.11am BST

Maike Currie, investment director for personal investing at Fidelity International, has summed up today's inflation data:

"After falling to 0.3% in April, inflation remains unchanged in May, below the 15-month peak of 0.5% recorded in March this year. Rising oil prices pushing up the cost of filling up your petrol tank coupled with eating out at restaurants and the price of smartphone services were the main upward drivers.

This was offset by falls in clothing and food prices. Since the beginning of the year, the pound has been markedly weaker, which is also likely to have pushed up prices.

10.01am BST

UK house price inflation has also slowed down, perhaps reflecting economic uncertainty ahead of the EU referendum.

The ONS reports that the cost of average house rose by 8.2% annually in April, down from 8.5% in March.

Annual house price inflation hits 27.3% in the City of London. And -11.1% in Merthyr Tydfil. @ONS: pic.twitter.com/JNATVa11Qd

9.55am BST

The inflation report also shows that UK consumers have been hit by the recent recovery in the oil price.

Transport costs climbed 0.9% in May, partly due to a 3p rise in a litre of diesel. Rising sea fares also had an upward impact, picking up slightly in 2016 after falling a year ago.

9.42am BST

Clothing and footwear prices fell by 0.2% between April and May this year, helping to keep the cost of living low.

The downward contribution came from a variety of clothing but particularly children's outerwear.

The downward contribution came from a variety of food product groups, most notably vegetables and confectionery.

The downward contribution came mainly from games, toys and hobbies (particularly computer games) with prices falling between April and May 2016 compared with a rise last year.

9.37am BST

At just 0.3%, Britain's inflation rate remains stubbornly low below the Bank of England's 2% target.

Just in case you were getting your hopes up that we might see a bit more of it. UK inflation unchanged at 0.3%. pic.twitter.com/gNLAJ3rinz

9.33am BST

Breaking: The UK inflation rate remained at 0.3% in May, below the 0.4% expected by the City.

That matches April's reading for the consumer prices index.

9.29am BST

The deputy chief of the International Monetary Fund has warned that Brexit would damage trade and hurt the global economy.

David Lipton, first deputy managing director of the IMF, told a press conference in Beijing that the referendum comes at a difficult time for the world economy.

"It's very hard to anticipate what those effects [of Brexit] may be, that uncertainty would be a negative factor and come at a time when the global recovery remains slow and somewhat weak.

That kind of uncertainty would be unhelpful."

9.05am BST

Ouch. The FTSE 100 has now tumbled below the 6,000 mark for the first time since February 25.

The index has shed 50 points this morning, or 0.8%, to 5994 points.

#FTSE back below 6000 for the first time since February. 'Brexit' polls leaving investors with a lot of anxiety before 23rd. #EUvote JG

FTSE falling, bond yields falling, VIX up
9 days to the referendum...

8.56am BST

FXTM chief market strategist Hussein Sayed confirms that investors are racing to safe-haven assets:

Markets anxiety was clearly reflected in CBOE's volatility index "VIX", which climbed above 20 for the first time since late February, indicating that investors are now taking the vote more seriously than in the past couple of weeks, and accordingly are adjusting their portfolios.

8.43am BST

European stock markets have hit their lowest levels since last February, as Brexit fears stalk the trading floors.

Britain's FTSE 100 has shed 34 points in early trading, down 0.5% at 6010. And there are deeper losses in other markets; the French CAC has lost 1.2% and the German DAX is down 0.9%.

The latest Guardian/ICM survey has the Leave campaign with a 6 point advantage, with polls from the ORB/Telegraph and YouGov/Times suggesting similar leads for Boris Johnson and co.

Perhaps most damning is the fact that The Sun this morning came out in favour of a Brexit with a flashy and trashy editorial on the reason why Britain should quit the EU.

8.26am BST

Boom! Germany's 10-year bond yield has just turned negative as investors scramble to buy debt issued by Europe's largest member.

This means they are effectively paying to lend to Berlin for a decade, in another sign that fear is gripping the markets today.

HERE WE ARE: The German 10-year yield just turned negative. For first time ever. pic.twitter.com/dOtbkZ5ISy

8.23am BST

In another sign of market angst, the interest rates on Britain's government debt has hit a record low.

The price of a UK 10-year gilt has hit record highs this morning, as money pours into government debt. And that has driven down the interest rates (or yield) on the debt to just 1.187%.

Flight to safety...UK gilts rally, borrowing costs fall. Japan & Oz also hit fresh record low yields today pic.twitter.com/33x40UcQcK

8.13am BST

The Bank of England is preparing to pump billions of pounds into the UK financial sector today.

8.01am BST

Sterling is starting the morning on the back foot, as traders digest reports of rising panic inside Downing Street about the EU referendum.

The pound has dropped by over one cent against the US dollar, to $1.4149. That's close to the two-month low hit yesterday morning (before sterling curiously bounced back).

And there it is. Pound falls to 2013-low against the Japanese Yen... where does this go? #FibonacciTuesdays #Brexit pic.twitter.com/EUzLFCB1q2

Bad day for FTSE and sterling me thinks. pic.twitter.com/J3cvvlDui8

7.37am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

It's Inflation Tuesday, the time when we find out how the cost of living changed in the UK in the last month.

Our latest #EUref polling averages:
Remain: 44.5%
Leave: 46.7%

Excluding undecideds:
Remain: 48.8%
Leave: 51.2% pic.twitter.com/961tlV0sWA

Risk is off, yen is up, UK opinion polls make ugly reading & the pound is down. UK CPI, US retail sales today. FOMC tomorrow, BOJ Thurs

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