The UK benchmark index looks set to start the week deep in the red, with investors continuing to digest the result of last week’s referendum when Britain voted to leave the European Union. Lloyds Banking Group (LON:LLOY) will be in focus amid reports that the government has decided to shelve its plan to offer shares to retail investors.
IG’s opening calls suggest that the Footsie will plunge 159 points to start the week at 5,980. The FTSE 100 is set to continue Friday’s slide alongside other European indices, pressured by global risk-off sentiment in the wake of last week’s Brexit vote. Stocks on the other side of the Atlantic plunged by more than three percent on Friday.
“I think investors mispriced the risk and quickly repriced it,” Chris Gaffney, president, EverBank World Markets, told CNBC. “That’s what we’re seeing now, the repricing of risk with heightened uncertainty.”
Asian markets meanwhile have been mixed this morning, with investors digesting the UK’s decision to leave the EU. Sterling, which plunged to a 31-year low on Friday, has tumbled more than two percent this morning.
At home, the Footsie lost 199.41 points to Friday, to end the day 3.15 percent in the red at 6,138.69, having plunged more than eight percent at the open, led lower by banks and housebuilders which are set to be most impacted by the vote. The index, however, recouped some of its earlier losses, with the fall in sterling set to benefit exporters.
“All the FTSE 100 companies, except for financials, with majority earnings outside the UK are boosted by the substantial fall in sterling which will inflate overseas earnings in the next results,” Lorne Baring, managing director at B Capital Wealth Management in Geneva, told Reuters.
There are no major macroeconomic releases out of Europe this morning. In corporate news, the Financial Times reported that plans to start the sale of £2 billion of retail shares in Lloyds over the next six months have been dropped owing to economic uncertainty following the referendum result.
SOURCE: Invezz
