FTSE Bounces Back After Post-Brexit Slump

LONDON (Reuters) – Britain’s top share index bounced back on Tuesday following two straight sessions of steep losses as insurers and banks, hit hard in the aftermath of Britain’s decision to leave the European Union, led the market higher.

The FTSE 100 index <.FTSE> was up 2.9 percent at 6,153.30 points by 1433 GMT, with all but five stocks trading in positive territory.

It had fallen more than 5 percent in the last two sessions after the Brexit vote, wiping nearly 100 billion pounds ($130 billion) off the value of blue-chip firms. Britain suffered further blows on Monday as ratings agencies cut their sovereign credit score.

FTSE 100 up, Sterling also up against US dollar. Come o!n #ProjectHope pic.twitter.com/sNF4kuAHAZ

— Martin Daubney (@MartinDaubney) June 28, 2016

The UK Life Insurance index <.FTNMX8570>, which plunged more than 20 percent in the past two sessions, surged 8 percent and headed for its biggest daily percentage gain since September 2011, led higher by a 10 percent jump in Prudential <PRU.L>.

Shares in Legal & General <LGEN.L> rose 7.8 percent, after it said its balance sheet had proved resilient to the Brexit vote and it had trimmed its exposure to riskier assets beforehand. Aviva <AV.L>, Standard Life <SL.L> and Old Mutual <OML.L> rose 4.8 to 8.1 percent.

“Equities look to have found their footing post-Brexit despite political turmoil in Westminster,” Mike van Dulken, head of research at Accendo Markets, said.

“Bargain-hunting may be helping as opposed to emergence of genuine support as markets adjust to a new normal and the prospect of the UK outside the European Union.”

The banking index <.FTNMX8350> rallied 3 percent after slumping 16.4 percent in two days, with some investors taking advantage of weaker share prices. Travel and leisure stocks <.FTNMX5750> rose 2.3 percent after a 12 percent slump.

The mid-cap FTSE 250 <.FTMC> rose 3.9 percent after the domestically-focused index’s 13.7 percent slump since Thursday. Shares in Ocado <OCDO.L> were up 10 percent after the food retailer reported a profit rise.

Leave.EU issues press release saying FTSE is performing well and jobs are being created post-referendum. pic.twitter.com/pDgnEhHO0g

— Jim Waterson (@jimwaterson) June 28, 2016

“Online supermarket Ocado continues to prosper with the group gaining market share on the seemingly inexorable rise of the armchair shopper,” AJ Bell’s Investment Director, Russ Mould, said.

“Ocado is benefiting from its tie-up with Morrisons and pre-tax profits are increasing, albeit at a slower rate, despite price deflation,” he said.

Shares in British challenger bank Shawbrook <SHAW.L> fell 14 percent, however, after it said it expected to book an additional impairment charge due to some irregularities in its asset finance business and that CFO Tom Wood had resigned.

(By Alistair Smout. Additional reporting by Atul Prakash; Editing by Ruth Pitchford)