Market overview: Sterling battling but Berenberg hikes Brexit risk

Oliver Haill Sharecast | 14 Jun, 2016 07:49 - Updated: 11:47 | | |

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09:15 28/04/17

1147: Economists at Berenberg have raised their risk of a Brexit from 30% to 40% after a slew of opinion polls suggested the balance of voters who want to stay in the EU versus those who want to leave the union has tipped even further in favour of 'Leave'. The German bank's poll tracker for the UK’s EU referendum currently indicates a three point lead for Leave as both the online polls and the telephone polls have now shifted towards a Brexit indication. They note that sterling volatility is currently 30% above its highest point during the 2008/09 financial crisis. Sterling is up from its day's low against the dollar to 1.4168, still a fall of 0.7% on the day.

1125: Football fans flying to Euro 2016 in France have been warned to expect possible flight disruptions, as French air traffic controllers prepare to strike. Lobby group Airlines for Europe (A4E) - which represents carriers including easyJet and British Airways owner IAG - said more than 100 flights will be cancelled, and countless more delays.

1012: Eurozone employment and across the EU increased 0.3% in Q1 of 2016 compared to Q4 2015. This was the highest levels since the third quarter of 2008, on a seasonally adjusted basis, Eurostat said. The quarter-on-quarter increase for the euro zone remained the same as the previous period's 0.30%, while across the 28 states of the wider EU there was a fall from the fourth-quarter's 0.4% rate.

0951: Eurozone industrial production grew more than expected in April, according to the latest figures from Eurostat. Industrial production was up 1.1% from March versus expectations of 0.8% growth. Durable consumer goods production rose by 2.3%, while the production of capital goods and non-durable consumer goods was up 1.9% and 1.6%, respectively. However, this strong rise "is unlikely to be the start of a strong upturn" declared Capital Economics.

0940: UK house price growth slowed in April compared to a year ago, according to the first combined report from the Land Registry and the Office for National Statics. House prices rose an annualised 8.2% to an average of £209,000, up 0.6% on the previous month. This was slower than the 8.5% year-on-year and 1.1% month-on-month gains in March when buy-to-let investors and second home buyers rushed to make purchases ahead of higher stamp duty on these properties on 1 April.

0935: The UK consumer price index (CPI) remained flat at 0.3% on an annual basis in May, short of expectations for a 0.4% increase from the previous month's 0.3%. The inflation data from the Office for National Statistics also revealed the month-on-month rate of CPI only rose to 0.2% when it had been expected to rise to 0.3% from 0.1% in April. Rises in transport costs, restaurant and hotel bills and the price of telecoms services were the main upward drivers of CPI, but were offset by falls in the price of clothing, food and games, toys and hobbies.

0900: In company news, Ted Baker shares gained after the clothing chain reported a 12.7% increase in first quarter retail sales and said it expects full year results to meet expectations. Travel group Go-Ahead plunged after saying it expects margins at its contract on the Govia Thames Railway to be lower than previously anticipated, while rival FirstGroup sped the other way after reporting a rise in full-year profit despite a drop in revenue following the loss of rail franchises. Housebuilders, including Taylor Wimpey, Crest Nicholson and Barratt Developments, were in the red on worries about Brexit.

0836: Sterling has hit a low of $1.4128, down around 0.8% on the day, before bouncing slightly, as broker Ladbrokes reveals its odds on a Brexit have hit an all-time high of 43%.

0810: London's blue chip and mid cap stock indices both dropped on the opening 10 minutes, with the FTSE 100 falling more than 40 points close to the breaking through the 6,000 mark that has not been breached since February, while the 250 dived by more than 90. Sterling is down more than 0.6% against the dollar and euro as Brexit risks continue to rattle the market.

0750: Bookmaker's odds and newspaper polls continue to point to growing momentum behind the campaign for the UK to vote to leave the EU. The lead of the campaign for the UK to ‘Remain’ has shrunk from a peak of 78% marked last Thursday, to 59% on Tuesday, according to odds compiled by Betfair. While a YouGov online poll for The Times gave Leave a lead of seven points, which was up three points from a week ago. On Monday an ICM phone and online poll for The Guardian found a six-point lead for the 'Leave' campaign, while the Telegraph's ORB poll has the lead for Leave at just one point.

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