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UK share price up, though early post Brexit days will remain Volatile says Governer Mark Carney BoE







Traders in LondonImage copyrightAFP

UK shares have risen for a third day, after Bank of England governor Mark Carney hinted at fresh stimulus measures following the Brexit vote.



By lunchtime, the FTSE 100 index was 0.7% higher, while the FTSE 250 was higher by 0.08%.


On Thursday, Mr Carney said a deteriorating outlook meant action from the Bank was likely this summer.



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Wall Street rose for the third straight day on Thursday, with the Dow Jones closing up 1.33% and S&P 500 up 1.36%.


Share prices were further boosted after Chancellor George Osborne said the government would abandon its commitment to achieve a budget surplus by 2020, suggesting as a result that the austerity policies of the last six years might be eased in the wake of the referendum result.


The FTSE 250, which had started the day 0.41% higher, fell in mid-morning trade before recovering by lunchtime.


During the campaign, Mr Osborne had warned of the need for a combination of £30bn of spending cuts and tax rises if the UK voted to leave the European Union.


Despite the rally on the FTSE, bank shares were still under pressure, with Royal Bank of Scotland receiving the greatest amount of punishment from investors. The bank's shares fell a further 3% by lunchtime.


Elsewhere, building supplies firm Travis Perkins saw its share price fall 2.4%.


Meanwhile, 10-year UK government bond yields fell to 0.831% and were on course for their biggest weekly fall since November 2011 on the prospect of the Bank of England pumping more money into the economy.


Earlier in Asia, stocks also rose for a third day, as investors bet policymakers would take steps to prevent further market uncertainty following the UK's decision to leave the EU.


The broad-based MSCI Asia Pacific Index rose 0.5%, bringing its gains this week to more than 3%.

In Tokyo, the benchmark Nikkei 225 closed 0.68% higher, while the Topix gained 0.69%.

South Korea's Kospi rose 0.9% and Australia's S&P/ASX 200 added 0.25%.

In China, the Shanghai Composite closed 0.1% higher.


Hong Kong and Thailand's stock markets are closed for holidays.


Gold, considered a safe haven investment in times of uncertainty, headed for its fifth week of gains, with bullion for immediate delivery trading at $1,322 an ounce.

The pound is currently trading flat against both the euro and the US dollar at $1.33 and €1.199, up from the lows that it hit on Thursday in the immediate aftermath of Mr Carney's speech.








However, sterling remains well below the $1.50 rate it touched on Thursday last week, before the outcome of the referendum became clear.

Analysts have warned the recent global market rally might not be sustainable

The past week has seen huge swings on the world's financial markets as traders and investors struggled to assess the impact of the UK's Brexit vote.


After two days of heavy falls following the referendum outcome, shares spent two days recovering, and on Wednesday, the FTSE 100 ended above the level it had closed at on Thursday last week.


However, the FTSE 250 index - which contains more UK-focused companies - still remains well below its pre-referendum level.



Further Reading 


A strong Europe in an uncertain world or A European Superstate ?

Statement by the Chancellor following the EU referendum

EUref Leave result : UK must 'clarify' stance says European Commission

Brexit Debate in European parliament Brussels 26 / 06 / 16 with world response

Senior Merkel ally says London should be allowed Brexit rethink