LONDON, Nov 15 — British stocks slid today with RBS and housebuilders sharply down after Brexit minister Dominic Raab quit in a blow to Prime Minister Theresa May’s efforts to win backing for her draft deal to exit the EU.
Housebuilders, retailers and banks all fell, dragging the FTSE 250 index down 1.5 per cent by 1350 GMT, while the exporter-heavy FTSE 100 managed to hold flat, supported by a plunge in the value of sterling against the euro and the dollar.
The resignations of Raab and the work and pensions minister Esther McVey in protest at May’s draft deal for leaving the European Union pushed sterling down 1.7 per cent against the dollar.
Traders say uncertainty has increased, with outcomes ranging from a second referendum, a “hard” Brexit and a general election.
Shares in state-owned lender RBS sank 9.1 per cent, set for their worst one-day loss since the June 2016 Brexit vote selloff, as shareholders priced in a higher risk of a general election.
The Labour party has pledged in its manifesto to break up the lender.
Lloyds shares also fell 5.7 per cent while Barclays fell 4.6 per cent as domestic banks were knocked by the heightened political uncertainty.
Housebuilders Persimmon and Taylor Wimpey fell 9.5 and 9.1 per cent, and Berkeley Group lost 7.1 per cent. All three were set for their worst day since the 2016 Brexit vote caused housebuilder stocks to crumble.
Peer Barratt sank 8.4 per cent, while mid-cap housebuilder Bovis Homes fell 10 per cent, and Redrow and Crest Nicholson dropped by 8 per cent and 6.8 per cent respectively.
The FTSE 350 index of housebuilder stocks was down 2.7 per cent and was set for its biggest daily loss in a month.
Retailers were also hit, with Marks & Spencer down 4.9 per cent and Next down 5.9 per cent.
“There is a high risk that parliament fails to pass the withdrawal deal in December,” said David Page, senior economist for the UK and US at AXA Investment Managers.
“Uncertainty over the coming months is going to be high and the prospect of a disorderly exit in March is rising,” he added.
Royal Mail shares made a U-turn from their positive open, trading down 6.9 per cent by 1320 GMT after first-half profit dropped about 25 per cent as costs weighed.
Shares in contractor Capita sank 10 per cent, the worst FTSE 250 performer, after the Financial Times reported it is in danger of losing a British public health service (NHS) contract after failing to send letters with cervical screening dates or test results.
A source later told Reuters the contract, which it said is currently loss-making, was not being withdrawn.
Asset manager Intermediate Capital Group was a rare gainer on the mid-caps index, up 6.5 per cent after its results showed a 17 per cent increase in first-half assets thanks to strong inflows of new money from clients.
The FTSE 100’s multinational exporters Unilever, Diageo, Reckitt Benckiser, British American Tobacco, and Imperial Brands were up by 0.8 to 2.9 per cent as they gained from the weaker pound.
Strong mining stocks also helped limit losses, with Randgold Resources, Rio Tinto, Glencore, and BHP Billiton rising 1.8 to 4.9 per cent on hopes of a rapprochement between the US and China on trade. — Reuters
