At the close: Markets take a clobbering as sterling slides and uncertainty reigns

Billy Bambrough
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Markets are falling around the world as volatility spikes (Source: Getty)

Traders and investors were left bloodied by a volatile session on the markets today.

The FTSE has closed down 2.55 per cent at 5,982.20, with a fifth of FTSE 100 companies racking up double digit price falls.

The internationally focused blue-chip index outperformed mid-caps however as the FTSE 250 – mostly made up of companies that trade in the UK – dropped by 6.96 per cent to end the day at 14,967.86.

The falls took the FTSE 100's total losses to 5.6 per cent over the last two sessions and wiping off nearly 100 billion pounds since the referendum results early on Friday.

The losses spread abroad as well, with the US major markets taking a heavy beating in early trading.

At least 10 companies had their shares suspended to try and stem the losses. Royal Bank of Scotland, Taylor Wimpey, Barclays, Legal & General, Virgin Money, Berkeley Group, Barratt Developments, easyJet, Crest Nicholson, and Persimmon all triggered circuit breakers.

Budget airline easyJet led the losses on the FTSE 100, nose-diving by 22.3 per cent after it warned the UK's vote to quit the European Union meant "additional economic and consumer uncertainty is likely this summer".

Read more: No emergency Budget – George Osborne moves to calm markets

EasyJet, one of the biggest airlines in Europe, said it expected revenues to fall as a result of Brexit. British Airways owner International Consolidated Airlines Group recorded a 15.9 per cent fall in its shares.

Meanwhile sterling briefly fell below the $1.313 mark, marking a fresh 31-year low and returning it to Thatcher-era prices. Sterling traded down by as much as 4.1 per cent at $1.3121 – taking its decline since Friday’s shock Brexit vote to nearly 12 per cent.

The market backlash has however been overshadowed by the chaos the unexpected Brexit vote has triggered amongst the UK's political elite. The Tory party is effectively leaderless after David Cameron announced his resignation on Friday, while the opposition Labour party's Jeremy Corbyn is facing a leadership challenge from his front bench.

Josh Mahony, IG market analyst, said:

The pound and UK stocks have taken a hammering for a second consecutive trading day today, as investor sentiment continues to wane on the largely unknown consequences of Friday’s Brexit result.

What we really need is some form of decisive action, as financial markets seek reassurance that things will be OK. What we look likely to get is two months of political infighting, followed by another 20 months of uncertainty as the new leader somehow attempts to secure a deal which appeals to the many facets of the leave campaign.

This will all take time and in the meanwhile, investors and businesses are left to ponder what the potential impact will be of this monumental decision.

Housebuilders were demolished, making up three of the top five biggest fallers.

Barratt Developments finished down by down by 19.4 per cent and Travis Perkins down by 16.7 per cent. Taylor Wimpey was down by 14.9 per cent.

Banks also fared badly as investors feared over future profits and the prospect of lower-for-longer interest rates in the UK and abroad.

Barclays – which had already lost 20 per cent of value on Friday – fell a further 17.3 per cent today. Lloyds Banking Group finished 10.3 per cent lower, dialling back investor expectations that the government would sell its remaining stake any time soon.

Read more: Sterling plummets to a new 31-year low against the dollar

Royal Bank of Scotland, still majority government owned, closed down by 15.1 per cent.

At the other end of the scale, miners and resource companies propped up the FTSE.

Precious metals miner Randgold Resources added nine per cent as the price of gold climbed. Fresnillo was up by seven per cent.

Oil major Royal Dutch Shell added two per cent.

Brexit Britain: What you need to know

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