FTSE 100 – back to pre-Brexit level

The FTSE 100 has had another good day, finishing above the level it stood at last Thursday, before the EU Referendum result.

FTSE 100 – back to pre-Brexit level

However the performance of the overall index camouflages the very divergent fortunes of the stocks within it.

Since last Thursday, around a third of FTSE 100 stocks have lost more than 10% of their value. Around two thirds are in negative territory, and around one in seven have lost more than 20%.

On the other side of the scales, around a third of FTSE 100 stocks have risen in price since last Thursday, with only a handful rising by more than 10%. What these stocks lack in number and price movement however, they make up for in size, accounting as they do for around 60% of the FTSE 100 by market capitalisation. They include big hitters like Shell, BP, British American Tobacco, Diageo, AstraZeneca, and GlaxoSmithKline.

The FTSE 250 has also bounced considerably, but hasn’t recovered to the same extent, and stands around 8% down on its closing price last Thursday.

(Stock price movements calculated from close on Thursday to 4pm today).

Laith Khalaf, senior analyst at Hargreaves Lansdown said: “The last few days have seen a tale of two stock markets playing out on the UK’s trading floors. The share prices of big companies with international revenues have prospered, while those exposed to the UK economy have been severely marked down.

“However, in the last two days these domestic stocks have bounced significantly. It’s quite remarkable how quickly sentiment can move the price of stocks up and down without so much of a hint of company news. This once again serves to highlight why investors should tune out the short term fluctuations of the stock market, because they often defy rhyme and reason.

“In the long run, stock prices are more heavily influence by company fundamentals, rather than sentiment, and in particular earnings. While in the short term the economic picture may have been dented by the Brexit vote, the longer term impact is less clear.

“In the meantime companies will still seek out opportunities for profits and for growth, though there will be winners and losers, so it’s probably a good time to get back to basics and maintain a balanced and diversified portfolio.”

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