Brexit-sensitive UK stocks sink on draft deal backlash
Exporters rise on back of weaker sterling
Brexit-sensitive stocks such as Marks and Spencer fell as political turmoil heightens in UK.
Housebuilders, retailers and banks all fell, dragging the FTSE 250 index down 1.1 per cent, while the exporter-heavy FTSE 100 fell just 0.1 per cent, supported by a plunge in the value of sterling against the euro and the dollar.
The resignations of Mr Raab and pensions minister Esther McVey in protest at May’s draft deal for leaving the European Union pushed sterling down 1.6 per cent against the dollar amid raised expectations among traders of a second referendum, a “hard” Brexit and a general election.
Mid-cap housebuilder Bovis Homes fell 8.2 per cent, while Redrow and Crest Nicholson dropped by 5.5 per cent and 5.3 per cent respectively.
Retailers were also hit, with Marks & Spencer down 5.7 per cent and Next down 5.4 per cent.
Debenhams fell another 6.8 per cent, after suffering its worst-ever day on Wednesday on a report high street suppliers are cutting ties with the department store group.
Paul Mumford, fund manager at Cavendish Asset Management, said there would “probably” be a few more resignations, increasing the uncertainty around the Brexit deal.
Mr Mumford said investors were selling sectors they see as vulnerable to a messy Brexit and domestic political uncertainty, while others await more clarity.
Royal Mail shares made a u-turn from their positive open, trading down 5.6 per cent after first-half profits dropped about 25 per cent as costs weighed.
Shares in contractor Capita sank 8 per cent, the worst FTSE 250 performer, after the Financial Times reported it faces the loss of its NHS deal after failing to send letters with cervical screening dates or test results.
Asset manager Intermediate Capital Group was a rare gainer on the mid-caps index, up 7.7 per cent after its results showed a 17 per cent increase in first-half assets thanks to strong inflows of new money from clients.