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FTSE slips again on Brexit fears but gold climbs and housebuilder Berkeley rises

FTSE

As leading shares slide back after Wednesday’s gains, with Brexit fears, falling oil prices and concerns about the latest Bank of Japan and Federal Reserve actions, there are a few bright spots.

With investors seeking havens for their cash, gold and silver are in demand, which has helped push up precious metal miners. Randgold Resources has risen 255p to £68.65, while Fresnillo is up 45p at £12.57.

Berkeley Group, which has been undermined like other housebuilders by Brexit concerns and also fell back on Wednesday after its latest update, has climbed 47p to £30.01 despite Credit Suisse issuing an underperform rating. The bank said, “Whilst we believe Berkeley remains a very well managed business, we do not believe the business is immune to the weakening conditions that are being experienced in the inner London new build housing market.

But Credit Suisse did raise its 2017 earnings per share forecasts by 2% and lifted its target price from £23.72 to £26.48.

Overall the FTSE 100 has fallen 38.48 points to 5928.32, even though UK retail sales came in better than expected. Investors are unsettled, not only by the number of polls showing the Leave campaign ahead in the EU referendum, but also by the yen soaring as the Bank of Japan kept monetary policy unchanged and the Fed becoming more cautious on the global economy. Connor Campbell, financial analyst at Spreadex, said, “With a rather negative Federal Reserve holding off on a June rate-hike, and stating that it expects a ‘slower path’ for any future rise, the markets had little reason for cheer this Thursday, the European markets returning to the red after yesterday’s dead cat bounce…

The usual Brexit fears are to blame for the resumption of the index’s decline, with Brent Crude’s dive below $48.50 per barrel failing to help matters either…

The FTSE could well see its losses intensify as the day goes on with the Bank of England set to stoke those Brexit-fearing fires later this morning with a firmer warning against leaving the EU (the central bank is also expected to unsurprisingly keep interest rates on hold). Mark Carney faced a lot of criticism last time he expressed an opinion on the referendum, so expect an apoplectic reaction from Vote Leave (and perhaps another fall from the pound) as Thursday continues.

Understandably the Eurozone shared the same fate as its UK cousin this morning, the DAX and CAC dropping by 1.2% and 0.9% respectively. It appears that the Eurozone indices and the FTSE are trading in lock-step at the moment, any region-specific nuance lost in the face of the looming referendum”.

Paul

The author Paul