Graeme Wearden (until 2.45) and Nick Fletcher 

Pound and shares soar as Brexit fears ease – as it happened

Biggest one-day jump for the pound since 2009, as the FTSE 100 surges by over 200 points
  
  

The City of London.
The City of London. Photograph: Alamy

But here’s the key question:

On that note, it’s time to close up. Thanks for all your comments, and we’ll be back tomorrow as we continue the run up to the EU referendum and find out if indeed the market rally can last.

Euroepean markets surge on UK referendum hopes

Volatility surrounding this week’s vote on whether the UK leaves the European Union has continued, with shares and the pound surging on signs that the Remain camp was regaining lost ground, recovering from their recent slump.

The FTSE 100 saw £47.5bn added to the value of the UK’s top companies, with the index up more than 3% - its biggest daily rise since February.

The pound recorded its biggest one day gain since the financial crisis of 2008, up more than 2% agains a basket of currencies.

Meanwhile oil rose more than 2.4% to $50.35 a barrel, helped by the latest on the referendum and a survey from data firm Genscape pointing to a fall in US crude stocks.

The final scores in Europe showed:

  • The FTSE 100 jumped 182.91 points or 3.04% to 6204.00
  • Germany’s Dax soared 3.43% to 9962.02
  • France’s Cac closed 3.5% higher at 4340.76
  • Italy’s FTSE MIB added 2.54% to 17,353.45
  • Spain’s Ibex ended 3.41% higher at 8647.1
  • In Greece, the Athens market rose 5.4% to 586.55

On Wall Street, the Dow Jones Industrial Average is currently up 1.09% or 192 points.

Updated

Jasper Lawler, market analyst at CMC Markets, said:

Global markets have had a Bremain bounce. A new optimistic tone has taken hold at the beginning of the final week before the Brexit referendum. A phone poll from Survation and an internet poll from YouGov showing a lead for the Remain side has prompted a perception that the Brexit tide has turned.

A change in bookmaker’s odds in favour of the UK remaining in the EU has been another contributor to fading fears of a Brexit in financial markets.

FTSE 100 closes up 3%

The FTSE 100 has closed 3% higher at 6204.00 after the latest polls suggested that the chances of the UK voting to leave the European Union had receded somewhat.

This is the biggest one day rise since 12 February this year, although the index has come off its best levels of the day, when it saw the largest daily increase since last August.

And it has only regained the levels seen on 9 June, before the polls started showing big gains for the Leave campaign.

Sterling is now 2.3% higher against the dollar, trading around $1.47, its highest level since January this year.

The pound is also up 2% on the day against the euro at 77.07p a euro.

Buy oil if the UK votes for Brexit, according to Bjarne Schieldrop, chief commodities analyst at Nordic Bank SEB:

Last week we saw a taste of what might happen to markets if the UK votes to exit the EU. Along a broad based sell-off across markets, Brent crude sold 11% off from the recent peak of $52.86 a barrel to a low last week of $46.94. There was a clear exit from long speculative positions and an increase in short positions in WTI crude [the US benchmark].

In the event of a Brexit, we expect Brent to sell down to between $40 a barrel and $45, which would be a great buying opportunity. The sharp rebound in the oil price during the last two days is a good indication of the solid appetite for buying oil whenever it drops below $50 a barrel. While a Brexit would be damaging for the Brent crude price in the short term, we think that its impact on oil demand would only be marginally negative. While overall sentiment in financial markets could be depressed for quite some time, the supply/demand balance for oil would not be impacted very much.

If we get a second negative round of sell-off ahead of the vote this week, with Brent crude down towards $45 a barrel, we view it as a good buying opportunity. If a Brexit then actually happens, Brent crude would sell further down, but it would not stay there long.

On Wall Street, the market has now indeed settled down, and the optimism continues.

The Dow Jones Industrial Average is now up 252 points or 1.4%, while European markets are holding on to the bulk of their gains.

In the general risk-on attitude among investors, oil is also on the rise, with Brent crude up 1.6% at $49.97 a barrel.

Carmaker Nissan has said it will take legal action against the official Leave campaign for using its logo in a leaflet calling on voters to back Brexit. Reuters reports:

On one “Vote Leave” flyer, the firm’s logo appeared next to those of four other major companies including Unilever and fellow carmaker Vauxhall with the message: “Major employers ... have all said they’ll stay in the UK whatever the result of the referendum.”

Nissan, which says it would prefer Britain to remain in the EU, said it would be issuing legal proceedings on Monday in Britain’s High Court to stop ‘Vote Leave’ from using its name and logo and to “prevent them making any further false statements and misrepresentations concerning Nissan.

US stock market jumps at the open

America’s stock market is joining the global rally, as nerves over Thursday’s EU referendum recede.

The Dow Jones index has jumped by 202 points, or 1.1%, as the chimes of the Wall Street bell ring out.

It will take a few minutes for trading to settle down, though.....

Updated

Analysts see late surge to status quo

More analysts are predicting today that ‘don’t-know’ voters will decide to back the status quo in Thursday’s referendum.

That’s a key factor behind the flood of money into shares, and the British pound, today.

Mujtaba Rahman of Eurasia Group says that many referendums across the world show that undecided voters don’t “break evenly”.

The British public is risk-averse and, absent a well-articulated plan for EU exit, is still more likely to opt for the status quo than a leap into the unknown. Historical analysis of six previous referenda in the UK (most prominently on the Alternative Voting system, devolution and Scottish independence) since 1975 show a tendency for a hefty swing towards the status quo in the run-up to polling day – a trend we are beginning to see from this weekend’s polling.

Derek Halpenny, the European head of global market research at Bank of Tokyo-Mitsubishi, makes a similar point (via Reuters)

The momentum has changed, and perhaps this is the first sign of what a lot of the polling experts had been suggesting,which is that the ‘don’t know’ portion was going to be crucial and historically there tends to be a shift towards the status quo in the final days before a referendum.

I think that’s what the market is reacting to.”

Updated

The stock market rally is hitting new heights, driving the FTSE 100 index up by 200 points today to 6223.

Unless the mood changes, we could be looking at the biggest one-day leap in 10 months.

City expert Louise Cooper has cautioned against assuming that the EU referendum is now “in the bag” for the Remain campaign.

She says:

Firstly, it should be no surprise to read that markets get things wrong.

Secondly this move is driven by computer trading, with computer algorhythms driving the move higher. As various technical levels are breached, more buy orders come in and momentum gathers. The “real players” in the market - corporates and pension funds - are mostly on the side lines....

The sterling rally does not suggest that the Remain campaign has it in the bag.

This is going to be one hell of a week.

Louise also confirms that the surge in the pound today is quite remarkable:

The pound has moved from buying one dollar forty cents on the lows of Thursday to buying $1.46 now...

As one FX strategist said to me this morning: “I’d normally expect to see that size of move in a month”.

Ladbrokes and William Hill have also cut their odds on Remain winning Thursday’s vote (meaning they see it as more likely)

The Brexit referendum is already the biggest political betting event in Betfair’s history (it was founded in 1999).

Betfair spokesperson Naomi Totten reports that more than £40m has now been staked on the result, including one £315,000 wager on Remain.

Totten says:

“With just three days left until the vote the Betfair market momentum is now all behind Remain, which was backed as low as 1/5 this morning, with one customer backing it to the tune of £100k.

This market continues to mimic the pattern of the Scottish Referendum, where historical confidence in the eventual ‘No’ vote slipped slightly ten days before referendum day only to resettle in the week of the vote.”

One City fund manager, though, suggests investors shouldn’t get carried away...

City investment management company Charles Stanley has warned customers that they could find it harder to trade on Friday morning.

They believe there will be massive demand to buy and sell shares and currencies, as the referendum result becomes clear.

Here’s an email sent to clients today:

This Thursday – June 23rd2016 – the country goes to the polls to decide on Britain’s future in Europe. It is a simple ‘yes’ or ‘no’ vote but we are expecting considerable volumes being traded through the Charles Stanley Direct platform as investors react to the news.

Whatever the results, we anticipate that we may experience higher volumes and more market volatility than usual on the 23rd June and in the days following the vote. The immediate impact is likely to be felt most directly by those of you wishing to trade shares during such market conditions.

It is possible that market makers will limit the size of orders that can be placed online and be slow to answer phones. In practice this may mean that you are more likely to have to place a limit order instead of a market order and it may take longer for us to be able to place such trades. Foreign exchange rates could also witness fluctuations and this has the potential to impact overseas trades placed during this time. We ask for your understanding if you are thus affected.

Our experienced Edinburgh-based helpdesk may also receive a surge in call and query volumes. We will respond to queries as quickly and thoroughly as possible, but once again we would be grateful for the forbearance of our clients in the event of unusually high volumes.

Here’s the best-performing major shares in London this lunchtime:

Midday summary: FTSE 100 gains £50bn in relief rally

Time for a catch-up.

London’s stock market is on a tear this morning, as investors react to signs that Britain is more likely to vote to stay in the European Union.

The FTSE 100 index of leading shares has surged by 196 points, or 3.2%, by lunchtime in the City. That means around £50bn has been wiped back onto the index, which is on track for its biggest one-day rise since last August.

Financial stocks are among the big risers, with Royal Bank of Scotland gaining 7.8% and Lloyds Banking Group up 6%. Building firms are also up, led by Taylor Wimpey (up 7%).

Traders are citing weekend polls, showing a pick-up in support for the Remain campaign in the last few days. Three polls gave Remain a small lead, and one had the two sides tied.

Mihir Kapadia, CEO at Sun Global Investments, explains:

“Today’s markets opened with a strong risk-on sentiment as news over the weekend suggests that the Remain camp is gaining momentum in the UK ahead of this week’s EU referendum”.

Betfair, the online gambling site, reports that the ‘implied odds’ of the UK remaining in the EU have risen to around 77%.

This has forced some investors to cut insurance which they’d taken out against Brexit.

Sterling is also bouncing back, and on track for its biggest one-day rise since 2009.

The pound is up by 1.8% right now at $1.4622 against the US dollar, a gain of over 2.5 cents.

Analysts at RBC Capital Markets have suggested that some voters are returning to the ‘status quo’, and deciding against Brexit.

Others have warned, though, that there could be further twists before Thursday’s vote.

Laith Khalaf, senior analyst at Hargreaves Lansdown,

‘Waves from the Brexit vote are buffeting the UK stock market, tossing it up and down as the opinion polls shift this way and that. Until the vote is over we can expect more price swings, as markets struggle to price in a unique event that carries with it such a high degree of uncertainty.

If you want to get an idea of what stocks will do well in the event of a vote to stay in the UK, it’s worth taking a look at today’s FTSE leader board. The market has clearly identified financials and house builders as beneficiaries of a vote to remain in the UK, with a Sterling rally also indicating how the currency might move if we vote to remain in Europe.

The move comes after David Cameron urged the public to “stay and fight” in the EU last night.

Overnight, a clutch of Nobel-prize winning economists warned against Brexit.

And the head of Germany’s trade body has warned that it would be a ‘catastrophe’ if Britain left the EU.

Updated

Here’s a handy chart, showing how the share prices of Europe’s largest 600 companies (dark blue) have tracked the twists and turns in the EU referendum race.

The latest opinion polls are prompting some international investors to readjust their views on the EU referendum - for the second time this month.

Initially, the City had broadly expected the Remain campaign to win the vote, before polls in early June showed Leave taking the lead.

So polls over the weekend, suggesting it’s neck-and-neck again, have triggered today’s rally.

Christian Gattiker, head of research at Julius Baer in Zurich, told Bloomberg that sentiment has shifted:

“We were steering into a clear Brexit scenario and now we’ve seen a counter move which makes it more balanced, more in line with what investors thought in the first place. ”

So, some traders who had protected themselves against Brexit are now ‘unwinding’ those positions - helping to drive the pound up.

Jasper Lawler of CMC Markets explains:

The bias in the city has generally been that a Remain vote is more likely, but polls pointing otherwise meant that assertion needed to be hedged. The unusually large jump in Sterling on Monday is in part, those hedges being unwound.

Updated

The US stock market is also expected to open strongly, in around four hours time:

Updated

Shares and sterling continue to rally

The rally is gathering pace, as investors worldwide shake off their recent fears.

After two hours of trading, the FTSE 100 is up a mighty 160 points, or 2.5%, at 6181.

That’s its highest level since June 10th, and its biggest once-day rally since 17 February.

And the pound is continuing to bounce - up almost three cents at $1.4628, and well away from the two-month lows ($1.40) hit last week.

Traders are continuing to respond to polls showing a pick-up in support for Remain.

Joshua Mahony, market analyst at IG, comments:

It is clear that the ‘remain’ campaign has suffered from a distinct lack of a positive message, with critics accusing the campaign leaders of fearmongering.

However, in some ways, it took the tragic death of Jo Cox for people to wake up to the positive message that she purveyed on the benefits of integration and tolerance. Perhaps it is a coincidence, but that incident has seemingly formed a turning point for the ‘remain’ campaign, with the improved fortunes of both polls and the pound ever since.

Reminder, our main EU referendum liveblog will be covering the recall of parliament today to pay tribute to Jo Cox MP:

German trade body warns against Brexit 'poison'

The head of Germany’s BGA trade federation has declared that Brexit would be a ‘catastrophe’ for Europe’s economy.

Anton Boerner told a press conference in Berlin that:

“A Brexit would lead to uncertainty and a loss of trust over several years. This is poison for the economy in Britain, but also for Europe as a whole.

Nobody will benefit from an exit. On the contrary, it would be a catastrophe for everybody and especially for us in Germany. There will be no winners, but only losers.”

Last night, 10 top Nobel Prize-winning economists predicted that Brexit would create major uncertainty, hurting global trade.

UKIP’s Nigel Farage, though, told the BBC this morning that Brexit wouldn’t be a major shock to the economy as European countries would be keen to strike a trade deal quickly.

Last night, prime minister David Cameron tried to persuade voters to back his campaign to remain in a reformed European Union.

The PM told a special edition of Question Time that he believes Britain should “stay and fight”, rather than quitting the EU.

At one point, Cameron declared:

“At my office, I sit two yards away from the cabinet room where Winston Churchill decided in May 1940 to fight on against Hitler, the greatest decision that anyone has ever made in our country.

Ana Thaker, market economist at PhillipCapital UK, reckons this is helping to push the pound up today:

Sterling has pared any losses we saw last week. PM Cameron appeared on Question Time yesterday, answering questions from the public regarding the impending referendum and support for ‘Remain’ has seen the currency strengthen.

Updated

Despite today’s rally, the markets are still in a relatively precarious position, says Connor Campbell of City firm SpreadEx:

The slightest sign that the public are shifting in favour of Vote Leave will likely see today’s gains rapidly dissipate, while an intensification of pre-referendum nerves as the week goes on could see markets chop and change even without any new polling news.

Pound on track for best day since 2009

Sterling is on course to post its strongest day since the aftermath of the financial crisis.

The pound is holding onto its early gains, and is up 1.6% against the US dollar at $1.458 right now.

That’s a really chunky move for sterling – according to Reuters data, such a big swing hasn’t happened since 2009.

Our friends at fastFT confirm that today’s rally is one of the biggest of the last decade:

Updated

There are still two referendum debates to look forward to...

Today’s stock market rally looks decisive, but we’ll probably see more market turmoil in the next few days

Kit Juckes, the experienced foreign exchange expert at French bank Société Générale, explains:

Polls remain very even, with the FT’s poll tracker showing both camps at 44%.

The market will surely gyrate some more in the next few days as any shift in that position triggers an exaggerated reaction, not just for sterling but for wider risk sentiment.

Ilya Spivak, currency strategist at DailyFX, says there is a global rush into ‘risky’ assets today.

“The British Pound soared at the start of the week and the Euro followed upward after new polling data released over the weekend showed ebbing support for “Brexit” at this week’s UK EU membership referendum. Survation reported a 45 to 42 preference for a “Remain” vote while an analogous poll from YouGov gave the status quo a 44 to 43 percent lead.

“The outcomes likewise bolstered risk appetite. The sentiment-linked Australian, Canadian and New Zealand Dollars tracked stocks upward while the anti-risk Japanese Yen plunged. The likewise haven-linked US Dollar is also under pressure. Gold prices and US 10-year Treasury futures likewise swooned as capital flowed away from safety-seeking assets.

Here’s the best-performing shares in the City this morning:

Updated

The London stock market has hit its highest level since 10 June, as this morning’s rally wipes out recent losses.

FTSE 100 jumps by 2%

Britain’s FTSE 100 index has surged by 136 points at the start of trading, as City investors react to the polls showing the Remain campaign gaining ground.

Almost every share is gaining ground, as money pours back into shares, pushing the benchmark index up by over 2%.

Royal Bank of Scotland, the taxpayer-owned bank, is leading the rally with a 6% surge. Lloyds Banking Group are up 5%.

And housebuilders are also leading the charge – they had suffered from fears that Brexit would mean less demand for housing, especially if the UK entered recession.

Mike van Dulken, analyst at Accendo Markets, explains:

A positive European open comes as weekend Brexit polls (and bookies’ odds) suggest the Remain campaign regaining some lost ground and in some cases re-taken the lead ahead of Thursday’s UK referendum vote on EU membership.

A higher chance of the UK voting to stay is a relief for markets (equities and the pound sterling) that had been preparing themselves for a Leave vote and the uncertainty it could inflict from both a financial, economic and political standpoint.

In Europe, the French and German stock markets both leapt by around 2.4% at the open.

Updated

And we’re off! European stock markets are opening sharply higher, with financial stocks leading the way......

Today’s newspaper front pages show how the EU referendum campaign picked up last night:

Pound jumps after "swing back to status quo"

Sterling is rallying hard this morning - another sign that Brexit worries are easing.

The pound has jumped more than two cents, or 1.5%, to $1.4572, after weekend opinion polls showed the Remain campaign picking up more support.

That’s its highest level since June 7, before opinion polls showed the Leave campaign in the ascendant.

Against the euro, the pound has gained 1% or 1.2 eurocents to €1.2848. That means one euro is worth 77.8p.

Analysts at RBC Capital Markets say investors are reacting to the latest opinion polls:

In the UK, there were three surveys released over the weekend that all showed some swing back towards ‘Remain’. The Survation poll showed a 45/42 lead for ‘Remain’ (up from 42/45 previously), a YouGov Poll showed a 44/42 lead (42/44 previously) while Opinium stood at 44/44 equal split.

Those polls were all conducted around the tragic events of last week - with some responses coming in before and some after the murder of Jo Cox.

Thus, it might be possible that the events influenced the polls but most experts commented that it is more likely that an expected and well documented ‘pull to the status-quo’ is responsible for the latest swing. The poll-of-polls averaging the last six polls has returned to 50/50 while the bookmakers’ odds for Brexit have fallen considerably to around 30% again.

How the polls have shifted

Here’s a round-up of the latest referendum opinion polls (from our EU referendum liveblog):

The FT poll of polls now pegs remain and leave on 44% apiece.

Shares surge in Asia

Stock markets across Asia have soared today, as investors grew more confident that the British public will vote to remain in the EU.

Japan’s Nikkei 225 index led the way, gaining almost 2.3% today.

The Nikkei is often a good barometer of investor sentiment -- liable to tumble when nervous traders drive up the value of the Japanese Yen (hurting the country’s exporters and raising deflation fears).

The Hong Kong Hang Seng index is close behind, up 1.8%, as is Australia’s S&P/ASX 200 index.

Although these trading floors are thousands of miles from the UK, Britain’s referendum is still top of the agenda.

Margaret Yang, an analyst at CMC Markets in Singapore, explains:

The entire market is now focused on the UK’s EU referendum result....

It is expected that a vote to remain would lead to a quick unwinding of risk premium and a substantial risk-on rally, whereas a Brexit vote would have the opposite effect.”

The agenda: Markets eye EU referendum

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

It’s a crucial week for investors around the globe, as the long-running UK referendum campaign enters its final days.

And London’s financial markets are expected to soar, following weekend polling showing that the campaign to Remain in the European Union is making up ground.

Asian stock markets have rallied strongly overnight, and it looks like Europe will follow suit at 8am.

IG are predicting that the FTSE 100 will soar by nearly 3% at the open – a really big move - as fears of a Brexit ease. The pound is also rallying in early trading, hitting a two week high (more on that shortly)

This may be premature...... there are still three days to go until the vote. Campaigning resumed last night, following a two-day break following the awful, tragic death of Jo Cox MP on Thursday.

Our main EU referendum blog will be tracking all the key political developments in the referendum today, including tributes to Jo Cox and her work in parliament:

There’s not much else in the economic or financial calendar, so the City should be free to watch the referendum campaign enter its final lap.

We’ll be tracking all the main economic and financial news through the day....

Updated

 

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