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UK shares continue to recover ground

Japanese shares

UK shares have continued to regain some of the ground lost in the wake of the Brexit vote.

After rising 2.6% on Tuesday, the FTSE 100 share index opened up 1.6% at 6,240.31.

The more UK-focused FTSE 250 index rose 1.6% in early trade, On Tuesday it had closed 3.6% higher.

After rising on Tuesday, the pound was little changed against the dollar at $1.3341 (£1.00). Sterling had risen as high as $1.50 (£1.12) before the referendum.

On Monday, the currency had plunged to a 31-year low against the dollar.

In volatile trade following the referendum result, the FTSE 100 had dropped 5.6% by the end of Monday, while the FTSE 250 had slumped 13.7%.

“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”, said chief market analyst at CMC Markets, Michael Hewson.

He continued, “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.”

Shares in banks – which had been particularly hard-hit in the wake of the referendum – continued to recover, with Barclays up 4% and RBS 3.3% higher.

The increases came despite credit rating agency Moody’s cutting its outlook on the UK banking sector to “negative” from “stable” late on Tuesday.

Moody’s also downgraded its outlook on the ratings of a number of UK banks and insurers.

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Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Paul

The author Paul