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Banks get clobbered again, as yields fall further

The fallout from last weeks “Brexit” vote continues to reverberate around global markets with the pound continuing to remain under pressure as concerns about the effects of the vote on the UK economy, dysfunctional UK politics, and the broader effects on Europe, dominate sentiment.

This morning’s comments from UK Chancellor George Osborne appear to have helped settle things down somewhat as he ruled out the prospect of an emergency budget in the short term and insisted that there would be no triggering of article 50 until such times as there was “clear view” on the future.

While the Chancellor’s measured tone appears to have helped alleviate concerns about a rudderless UK ship, concerns about the banking sector continue to be a pressure point for investors, as dark threats about the removal of financial pass-porting continue to weigh, and yields continue to fall.

This has prompted further selling of banking stocks which have continued to remain under pressure with Royal Bank of Scotland and Barclays continuing their Friday slides.

European banking stocks don’t appear to be faring any better as the prospect of continued uncertainty about a future relationship between the UK and the EU and the linkages between the respective banking sectors continue to fuel uncertainty about the stability of the sector.

Deutsche Bank has once again hit new record lows while Italian banks have also remained under pressure.

Spanish banks have also slid back despite initially opening higher after the weekend election saw Mariano Rajoy once again fall short of an overall majority, though his party did increase the number of seats from the vote in December.

Easyjet shares have also come under pressure sliding sharply and hitting a three year low after the company warned this morning on profits in the wake of last week’s Brexit vote.

Housing stocks have also slid further led by Taylor Wimpey and Barratt Developments while London estate agent Foxtons warned that the London property market could well see a prolonged downturn as a result of last week’s vote, as their share price hit their lowest levels since the IPO in 2013, down over 60% from when it.   

On the plus side gold miners have continued to benefit as a result of continued resilience in the gold price with Fresnillo and Randgold Resources leading the gainers.

Defensive stocks have also started to see some bids come in with the big global multinationals finding a few buyers, as Diageo, Unilever and Reckitt Benckiser all benefit from a weaker pound.

The pound has continued to come under pressure while the 10 year gilt yield has fallen below 1% for the first time ever in a sign that the market is pricing in the prospect of significant further easing measures from the Bank of England in the coming weeks and months.

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