FTSE indices retreated slightly, with the FTSE 250 falling 2.12% given constituents’ exposure to the UK economy. The FTSE 100 closed -0.84% despite resource companies rallying hard intraday, this was negated by data indicating a seven year low for construction PMI data provoking further selling of house builders, along with temporary Sterling/dollar weakness. In other news, Nigel Farage, leader of the UK Independence Party stepped down from his responsibilities as leader of the party today, after kindly helping to guide the UK out of the EU. The ex-party leader commented that he ‘has his country back’ and now he ‘wants his life back’. Now, only one of the three main figureheads of the ‘out’ campaign remain politically active.
The Markit and Chartered Institute of Procurement & Supply’s construction purchasing managers’ index fell to a seven-year low of 46.0 in June from 51.2 in May(a contraction in the sector). This figure came in well below economists’ expectations of 50.5. Reports from those who completed the surveys linked the downturn in business activity to uncertainty in the UK ahead of the June 23 EU referendum. Markit commented that the fall in the PMI reading was led by a steep decline in residential building and a reduction in commercial work for the first time since May 2013.
The PMI read prompted selling of Sterling, as it hit a low of US$1.3241 after the data, but rebounded higher to US$1.3334 as UK markets approached closing time. This led to house builders selling off down both the FTSE 100 and FTSE 250 indices including Crest Nicholson(-8.1%), Persimmon(-6.8%), Barratt Developments(-6.4%), Taylor Wimpey(-6.3%) and Bovis Homes(-7.4%), as well as online estate agent Rightmove(-6.4%).
Precious metals miners were the largest gainers in the primary index, a movement which was instigated by higher gold and silver prices. Gold traded at US$1,350.64/oz at midday London, compared with US$1,337.16/oz as markets in London closed on Friday, meanwhile silver hit its highest level in two years at US$21.10/oz.
Collectively, European indices were lower with the FTSE 100 -0.84%, the CAC 40 -0.91%, and the DAX 30 -0.69%, despite promising overnight trade in Asia.We will have to wait until tomorrow for US equity moves given the 4 July ‘Independence day’ holiday is observed today.