Playing FTSE with Brexit

Some in the media have led people to believe there was a collapse of the Stock market on news of Brexit. It is true dealers greatly widened prices for a bit before things settled down, with some silly low prices at the opening.

So what has in fact happened,  now there has been a trading day to digest the news?

The FTSE 100 index hit a low of 5909 in September of last year, rallied, and hit another low of 5536 in February. This was all before the intense Brexit campaign and news coverage of Brexit. These movements were also in line with other major world markets, that also sank in the first weeks of 2016.

This week, the week of most intense news and market focus on Brexit, the market ran upwards, reaching 6138 on Wednesday. It closed at exactly the same level, 6138 on Friday. It is true that on Thursday it spiked upwards to 6334 when markets expected a Remain win, and fell back to the Wednesday level on Friday when Leave won.

The surprising things about the FTSE given the alleged mood are that 1. It has risen a lot over the referendum period  2. Its correction on Friday was modest.

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22 Comments

  1. Chris S
    Posted June 25, 2016 at 11:30 am | Permalink

    Scottish Response to Brexit

    Having just held her first post-Brexit cabinet meeting, (Sturgeon ed) is conveniently forgetting she has a £15bn black hole in her budget which is currently being filled by the rest of the UK. Let there be no doubt, that means the taxpayers of England are paying for the free prescriptions and university fees and much else.

    German taxpayers will have no desire whatsoever to take over from their English partners and indulge Sturgeon’s extravagance using their cash.

    To join the EU, the reality is that Scotland will have to accept the Euro and meet the convergence criteria which means reducing the budget deficit to at most 3% of GDP.

    Currently it’s running at 10% or £15bn.

    That will significantly worsen with independence when they lose the revenue from the Faslane Naval base and, worse, the jobs and taxes from Defense shipbuilding when that whole industry moves to Plymouth and Portsmouth. In reality, they could then be talking about a deficit of £20bn.

    The only saving grace to offset this disaster would be if some Financial Services jobs relocate to Edinburgh rather than Paris or Frankfurt un order to remain within the EU.

    Will the canny Scots turn their backs on the country in receipt of 75% of their trade and vote for massive Austerity ?

    If they do, they will be one very small, deficit country among 28 and will have to accept full Eurozone financial integration. That would be more of a straight-jacket than the freedom theycurrently have within the United Kingdom.

    Alternatively they can remain a significant part of the 5th largest economy in the World.

    But there is another question if they choose to call another referendum :

    Will England still will be willing to continue to subsidise Scotland under Cameron’s over-generous 2015 settlement ? This has to be open to doubt.

    If Sturgeon chooses to hold another referendum she will provide England with an opportunity to offer less generous terms. I’m sure that this would be what the English voters would want to happen.

    And as Sturgeon has just seen, English voters are ready and willing to tell their political leaders in no uncertain terms what they want to see happen.

  2. Anthony Makara
    Posted June 25, 2016 at 11:42 am | Permalink

    Smart Money is always on the move, and needs to be. The very idea that the UK economy would become a pariah after Brexit was always a nonstarter. However I wonder what could happen if Sterling were to undergo a protracted period of weakness, given the BOE’s absolute dread towards raising rates. This could present a problem if the BOE needed to shore up the Pound at some point because the knock on effects re: liquidity would severely damage the self-employment and small start-up boom we’ve seen in recent years. This could account for as much as 15% of jobs being lost. George Soros himself has speculated that Sterling will come under sustained attack before long. So its a matter of ‘What if?’ and whether Carney and the BOE have the contingency and the courage to support our currency?

  3. CHRISTOPHER HOUSTON
    Posted June 25, 2016 at 12:00 pm | Permalink

    Young things ( experts) now on TV are phenomenal. The latest one talks of “carnage” ( from Old Italian carnaggio: slaughter, murder ) on Wall Street.

    Frankly I’m surprised at the stamping of feet and general pique at the Brexit result. I did not quite realise how the pro-EU propagandists had put their careers, and in particular personal street-cred on a Remain vote. Now they seek every single bowel movement of the stock market and commodity-price fluctuation to re-justify their previous inane and rather inexpert analysis.
    The best people, usually, are abroad, and they say ” substantial money is being held back” until things become less uncertain in the economic sphere. That’s OK, though not exactly true. One thing is for sure, there are limited places for “great movers of money” to dump their hoards. Hard to place their talents where their clients will receive any return. So the hoards of money will not stay in cyberspace doing nothing for very long. In the meantime, stocks are cheaper with youthful impatient and exaggerated over-selling.
    In that unemployment will increase according to their much passed around propaganda, the “experts” will not last long in their own jobs.
    Amazingly, they see a lowered Pound on their charts as stuck at a lower level with superglue even though they have never seen such stickiness in the entire history of currency metrics. It is a pity that ideology has crept into the financial world. One hears professors of economics from various places coming out with quite frankly silly views whether one was for Leave or Remain.
    I’m sorry, but our education system is absolutely lousy.

  4. Yosarion
    Posted June 25, 2016 at 12:04 pm | Permalink

    Watching C4 news I was amazed at what they were saying, its almost as if the left wing journos have given themselves a mandate to talk the economy down to prove they were right after all.

    • Lifelogic
      Posted June 25, 2016 at 1:56 pm | Permalink

      That is exactly it. Any most of them, being fairly innumerate, simply do not have a clue what (for example) an increased UK bond price suggests.

    • Denis Cooper
      Posted June 26, 2016 at 9:50 am | Permalink

      A measure of their patriotic feelings towards the UK, they lost the vote and now they are prepared to do maximum damage to the UK as revenge on the electorate.

    • Bryan
      Posted June 28, 2016 at 1:44 pm | Permalink

      Your article is so right. Channel 4 news journos want to remember that
      many people will be watching and listening to their programme. It should be apparent, that talking doom and gloom will not be helpful to us, as a country nor for all our futures or our children’s. Let us all forget our differences ;
      look for opportunities and make GREAT BRITAIN strong again.

  5. Chris S
    Posted June 25, 2016 at 12:22 pm | Permalink

    I see that Jonathan Hill is to resign as our EU Commissioner.

    This is a deeply unhelpful move, considering he had control of the vitally important Financial Services Portfolio. If ever there was a time when we needed to be at the heart of the EU on an issue it is now.

    His action seems to be a deliberate effort to sabotage crucial efforts that need to be made in order to obtain a satisfactory negotiated outcome on Financial Services.

    He has just given Juncker a perfect opportunity to screw us over a vital part of our economy. Whoever replaces Hill will be given the most menial job. He’ll probably be put in charge of toilet cleaning.

    • Denis Cooper
      Posted June 25, 2016 at 1:01 pm | Permalink

      This might come as a surprise to those who insist on believing that the Briton nominated to the EU Commissioner is “our” Commissioner.

      https://euobserver.com/tickers/134011

      “Juncker to British staff: ‘You are Union officials’

      By EUOBSERVER

      24. JUN, 14:09

      “I will work … to ensure that we can all continue counting on your outstanding talent, experience and commitment,” EU commission president Juncker wrote to civil servants, especially the Britons. In a letter leaked by Agence Europe, he said: “You are ‘Union officials’. You work for Europe. You left your national ‘hats’ at the door … and that door is not closing on you now.””

      • Lifelogic
        Posted June 25, 2016 at 6:42 pm | Permalink

        Indeed they rarely act in the UK’s interests. Nor even the EU citizen’s interests generally.

  6. Ian Wragg
    Posted June 25, 2016 at 12:22 pm | Permalink

    O/T I see the Remainiacs never give up. Starting an online petition for a rerun . I bet if it had been the other way the BBC would be hailing it as a resounding victory.
    I fear there will be many obstacles placed near the exit.
    Keep their feet to the fire John.

    • Denis Cooper
      Posted June 25, 2016 at 1:05 pm | Permalink

      As I point out in a comment on the last thread that petition has been around since May 23rd, and it may have been started by either a Remainder fearing a Leave vote or a Leaver fearing a Remain vote. One would have to contact William Oliver Healey and ask him why he started it:

      https://petition.parliament.uk/petitions/131215

  7. Edward2
    Posted June 25, 2016 at 12:28 pm | Permalink

    A copy of this should be sent to all the mainstream media channels who keep reporting only the movement since the result of the referendum was announced.

  8. zorro
    Posted June 25, 2016 at 12:36 pm | Permalink

    Unfortunately, this Is Cameron summed up in a few alleged words to an aide….. ‘Why should I do all the hard s**t’…. This is the man who was expected to negotiate previously a good deal for UK, and subsequent to Brexit, in his own words, carry out the will of the people…… Selfish, contemptible, and unworthy.

    http://blogs.spectator.co.uk/2016/06/referendum-rage-get-better-david-cameron/

    zorro

  9. Antisthenes
    Posted June 25, 2016 at 12:42 pm | Permalink

    The BBC is being as impartial as usual. Not. The EU has decided to play hard ball. Already dictating when we should start the exit process and how quickly a new Conservative leader should be elected. Leopards do not change their spots. It is a case of how dare the British public decide against BBC opinion and the EU’s absolutism. They fail to see that it is their arrogance and high handed manner in the first place that turned us against them.

    Lord Hill going DC not welcome at EU meetings why? We are still a full member and therefore entitled to all the rights associated with that until we leave. This is another case of EU law (and what that law is only Brussels can decide) only applies to member states but not to Brussels. Brussels have often gone this route and turned a blind eye to member states rule breaking when it serves their purpose. Is that an institution any reasonable person wants to be part of? I think not the sooner we are gone the better.

    • Jagman84
      Posted June 25, 2016 at 4:31 pm | Permalink

      If they wish to play hardball then how about turning off the money tap. It’s what many voted for and would be a statement of intent. I don’t think they realise that they cannot make demands on the UK, as before. Article 50 suits the EU as it keeps a hold over us. We should enact the great repeal of EU acts and let them come to us for trade deals. It will not be a long wait.

      • Antisthenes
        Posted June 26, 2016 at 6:46 am | Permalink

        You have a point. The UK is not exactly toothless but perhaps too many are gutless or left of centre in their thinking. Both a considerable handicap to Brexit on decent terms.

  10. CHRISTOPHER HOUSTON
    Posted June 25, 2016 at 12:44 pm | Permalink

    There is much scrambling about post-Brexit. Pique. Self-justifying behaviour from people who are allegedly educated better. Much of the un-invested and at present misdirected money from International Financiers are merely their own career-threatening justifications for their incorrect analyses of post-Brexit real economic realities.

    One expects BoE changes in personnel soon.
    Perhaps the OBR needs dragging through with a Christmas tree too not to mention Mr Osborne being sent to Avalon, strapped to the back of his horse after a measured encouraging whip.

  11. ian
    Posted June 25, 2016 at 12:57 pm | Permalink

    I see more money to be taken off the people and be given to big business as hand outs.

  12. ian
    Posted June 25, 2016 at 1:35 pm | Permalink

    I myself cannot see another ref but desperate people do funny things, it happened in a lot of other countries,

  13. Bryan
    Posted June 28, 2016 at 1:50 pm | Permalink

    Bryan’s reply was to Yosarion’s article, please adjust, thank you

  14. Bryan
    Posted June 28, 2016 at 2:23 pm | Permalink

    Yosarion’s article is so right. Channel 4 news journos want to remember that
    many people will be watching and listening to their programme. It should be apparent, that talking doom and gloom will not be helpful to us, as a country nor for all our futures or our children’s. Let us all forget our differences ;
    look for opportunities and make GREAT BRITAIN strong again.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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