European Markets End Week Up in Brexit Aftermath
A week after the historic decision taken by the U.K. to leave the European Union, markets in the region have ended the week up after huge falls in the immediate aftermath of the referendum.
However, the Brexit fears seem to now be felt by bond markets. Yields on government bonds throughout the world fell. The 10-year Treasury bond, 10-year U.K. government bond and 10-year Japanese government bond hit historic lows as fears of global growth mount and investors await further monetary easing from central banks.
In the U.K. further strain is being put on the economy as the government figures out its next steps. Today, U.K. finance minister George Osborne said he has nixed the 2020 target to have a budget surplus in the country. He said the government needed to be realistic about public finances given the impact of Brexit.
In London, the FTSE 100 gained 1.13% to end the week at 6,577.83. Miner Fresnillo was the biggest gainer in London today, closing 7.06% up. Analysis by investment advisor Hargreaves Lansdown found that Fresnillo was the biggest winner out of Brexit, gaining 32.7% between the close of the market on Thursday June 23 and Thursday June 30.
Housebuilders also gained on the FTSE today. Perismmon was up 6.43%, Taylor Wimpey was up 5.29% and Berkeley Group was up 5.19%. According to the Hargreaves Lansdown research homebuilders were one of the worst hit stocks since Brexit.
In the eurozone, the equivalent purchasing managers' index edged up to 52.8, better than expectations for a stable 52.6 index reading, while the index for Britain jumped much more than expected to 52.1, a rise of two full points. Markit's data was compiled largely before the outcome of last week's Brexit vote.
In Frankfurt, the Dax was up 0.99% at 9,776.12 and the Cac 40 closed at 4,273.96 at 0.86% in Paris.
Volkswagen (VLKAY) was up 4.94% in Frankfurt. The car maker this week doled out $15 billion in compensation for diesel emission rigging.
Deutsche Bank (DB) - Get Report gained 2.28% today, even after the International Monetary Fund deemed it the riskiest lender in the world. Today the company announced that head of the investment bank Jeff Urwin would take on responsibility for the Americas. This comes as the bank set up an intermediate holding company in the U.S.