Britain’s blue-chip share index fell on Wednesday, with a sharp sell-off in retail and property-related stocks outpacing a rally in precious metals miners after prices of safe-haven gold hit a two-year peak.
The FTSE 100 fell 0.5 percent by 0846 GMT. The internationally-exposed FTSE 100 has partially recovered following a post-Brexit slump and is up about 4 percent since June 23 – the date of the EU referendum.
However, it is down about 10 percent in dollar terms as the slump in the sterling to a 31-year low has reduced the dollar value of the market.
In contrast, Britain’s domestically-focused, mid-cap FTSE 250 share index fell 1.1 percent (177 points to 15,557) as investors continue to bail out of British companies, underperforming the blue-chip index, with property and banking stocks falling heavily on concerns about the country’s economic outlook after the vote to leave the European Union.
The mid-cap index has fallen more than 10 percent since June 23 in sterling terms.
“The FTSE 100 is doing its best to keep the post-Brexit recovery alive in spite of the understandable uncertainty that has arisen following the referendum,” said Mike van Dulken, head of research at Accendo Markets. “Defensives and safe havens have certainly lived up to their name.”
Gold miner Randgold Resources rose 4 percent to a new record high, while Fresnillo gained 4.3 percent to the highest level since late 2012.
Utilities stocks, generally seen as defensive plays, were also in demand, with United Utilities, Severn Trent, SSE and National Grid gaining 1.5 to 2.4 percent.
However, UK retailers slipped following a negative sector note from HSBC, with shares in Tesco and Morrisons falling 5 percent and 3.7 percent respectively.
“We expect that Tesco has lost a lot of its buying power and position over recent years due to mismanagement,” HSBC analysts said. “We downgrade (it) to ‘hold’ from ‘buy’ as short-term sentiment would be against the sector.”
Economic concern amongst retailers is anticipated to continue as Marks & Spencer will announce their first quarter results while Sports Direct announce their annual results on Thursday. They are also expected to reveal their opinions on the effect of the Brexit victory last month on their businesses.
Marks &Spencer’s shares plummeted 22 percent two days after Britain voted to leave the EU as investor’s became increasingly worried over the impact on consumer confidence.Despite partially recovering, investor’s faltered confidence in the country’s economic outlook persists.
Carpetright, one of Britain’s largest floor covering retailer, cautioned that Britain leaving the EU could trigger “uncertainty” among consumers while Ocado, an online supermarket, said that supermarket prices could rise as the decreasing value of the pound increases pressure on rising import costs.
The market value of top British housebuilders was also hit,going down by approximately 8 billion pounds ($10.5 billion) after Britain voted to leave the EU. Stocks partially recovered but began to fall again.
Property-related companies came under further selling pressure as shares in Barratt Development, Taylor Wimpey and British Land fell 2.4 to 3.5 percent on lingering concerns about the sector’s growth outlook.
Despite enjoying a 12 percent hike in first-half revenue, Persimmon fell 5.2 percent.
“You wouldn’t guess from Persimmon’s results that the company has lost around a third of its value in the last fortnight,” said Hargreaves Lansdown analyst Laith Khalaf.
“That’s because the stock market is looking forward to the next six months and beyond, and the Brexit vote is casting a long shadow over the UK house building sector … until we get a picture of housing activity following the referendum result, the stock market is likely to push the sell button first.”
Shares in mid-cap companies Redrow, Bovis Homes and Zoopla Property fell 3.5 to 4.1 percent. Domestic banks Metro Bank and Shawbrook were down 7 percent and 3.6 percent respectively due to concerns over Brexit.