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Footsie set to extend rally from post-Brexit vote slump after gains by US and Asian stocks, but sterling slips

FTSE

The Footsie is seen up another 60 points at the open, extending yesterday’s strong rally from the post-Brexit vote slump of the previous two sessions in tandem with overnight gains by US and Asian markets, although the pound has seen the previous session’s recovery falter.

The FTSE 100 closed 2.6 per cent, or 158.19 points higher yesterday at 6,140.39 as bargain hunters swooped on cheap stocks following the post-Brexit market slump, although it remained 3 per cent below Thursday’s closing level.

US and Asian stocks rose overnight swept up in the global relief rally as the immediate drag from the Brexit vote began to ebb and investors wagered central banks would ultimately ride to the rescue with more stimulus measures.

Japanese Prime Minister Shinzo Abe today urged the Bank of Japan to provide ample funds to ensure market liquidity.

Michael Hewson, Chief Market Analyst at CMC Markets UK, said: ‘With no likelihood of Article 50 of the Lisbon Treaty getting triggered any time soon it seems that the status quo isn’t likely to change in the short term, with an emergency EU Summit scheduled in September being pencilled in for a new UK Prime Minister to submit plans for next steps.

‘Whilst that doesn’t remove the uncertainty with respect to the eventual outcome it also means that markets are going to have plenty of time to settle into their new found reality and equilibrium, as the extra time allotted could well see cooler heads prevail as some of the temperature is taken out of what still remains quite a tense situation.’

There was also support from firmer oil prices which gained as a looming strike by Norwegian oil and gas field workers threatened to cut output. Brent crude was up 0.5 per cent to $48.82 (£36.44) a barrel in early London trading.

But on currency markets, after its rally yesterday, the pound drifted lower again today, losing 0.4 per cent against the dollar at $1.3292 (£0.99), and down 0.3 per cent versus the euro at €1.2020.

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Paul

The author Paul