Pound falls and house builders slump on Brexit fears

The pound has fallen and shares in house builders have slumped on no-deal Brexit fears after EU and UK negotiators failed to come up with a trade agreement over the weekend.

Sterling dropped 1.3% to $1.327 against the dollar while UK mid-cap companies on the FTSE 250, which are more exposed to the UK economy, fell into the red, down 0.8%.

The pound’s fall meanwhile lifted the FTSE 100, whose stocks rely on overseas markets for around three-quarters of their earnings. The UK blue-chip index was up 17 points, or 0.3%, at 6,568.

Spreadex analyst Connor Campbell said a weekend of ‘contradictory Brexit headlines’ had left markets worried.

‘Despite EU claims that there has been a breakthrough over fishing rights – something in and of itself denied by UK sources – Monday’s reports have prime minister Boris Johnson ready to abandon negotiations “within hours”,’ he said.

‘Though we’ve been at the brink many times over the last four and a half years, it seems that Brexit talks are finally reaching their crescendo, for better or worse.’

House builders and property companies fell to the bottom of the FTSE 100 on the news.

Berkeley Group (BKG) was the biggest faller, sliding 7.4%, or 354p, to £44.10, followed by Persimmon (PSN), which dropped 6.4% or 185p, to hit £26.83.

Others in the included:

  • Barratt Developments (BDEV) down 6%, or 39p, at 613p;
  • Land Securities (LAND) down 4.7%, or 34p, at 691p;
  • Taylor Wimpey (TW) down 4.4% or 7p, at 153p;
  • British Land (BLND) down 3.8%, or 19p, at 490p.

Financial stocks also fared badly this morning, with Lloyds (LLOY) shedding 5.4%, or 2p, to trade at 36p, followed by Legal & General (LGEN) down 4.4% at 250p. NatWest (NWG) declined 3.9% to 163p, and Barclays (BARC) lost 3.5% to trade at 143p.

House builders were the heaviest fallers on the FTSE 250. Countryside Properties (CSP) dropped 8.5%, or 36p, to 414p, Vistry Group (VTY) was down 7.2% at 848p, Crest Nicholson (CRST) lost 7.1% to trade at 296p and Bellway (BWY) declined 5.5% to £28.15.

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