Banks and housebuilders hit hardest in Brexit fallout


Banks and housebuilders have been among the biggest losers in the morning following the UK’s vote to leave the European Union, with Taylor Whimpey falling 40.3 per cent and Barclays dropping 27.9 per cent.

The stock market has fallen 6 per cent, with domestically focused mid and small caps set to be the other big losers today, down 10.3 per cent in the first half hour of trading.

The FTSE 100, which receives 78 per cent of revenues from overseas, fell 6.7 per cent. Observers agree it will benefit from the tumbling sterling, while domestically focused mid and small caps will suffer.

The return to safety in gold has been felt in the FTSE, says AJ Bell investment director Russ Mould.

“Only 10 stocks in the FTSE 350 are in positive territory. Precious metal miners are leading the charge on the back of a 4.7 per cent rise in the gold price.

“Acacia Mining advanced 14.7 per cent, Randgold Resources is up 14 per cent and Fresnillo jumped 11.9 per cent. Rolls-Royce is a surprise riser with a 2.2 per cent gain. Drug maker GlaxoSmithKline nudged ahead by 0.2 per cent.”

Housebuilders have taken the biggest hit as investors fret about a slump in the property market, says Mould.

“Taylor Wimpey is down 40.3 per cent, Berkeley falls 35.9 per cent, Crest Nicholson drops 34.8 per cent and Barratt Developments slumps 28.6 per cent.”

Lloyds Banking and Royal Bank of Scotland, which have repositioned operations to focus on UK retail and commercial markets, fell 26.1 per cent and 19.4 per cent respectively.

Barclays large presence on the UK high street saw it fall 27.9 per cent; however, the UK’s largest bank, HSBC, only fell 4.8 per cent due to its large overseas presence.

Hargreaves Lansdown senior analyst Laith Khalaf says: “There could be further falls, but when stock markets fall sharply, there is usually a correction at some point along the line.”

Rory Bateman, head of European equities at Schroders, says price movements upwards of 10 per cent were a “kneejerk” reaction. “We will be opportunistic given some of the size of the falls we’ve seen this morning.”