The news that Brexit secretary Dominic Raab is to resign, a little over 12 hours after cabinet gave its apparent backing to a draft deal on exiting the EU is prompting a big sell-off in domestic-focused stocks as sterling slumps.
This is reflected in the performance of the internationally-focused FTSE 100 which remains in positive territory, up 0.2%, while the more UK-biased FTSE 250 falls more than 1%.
Housebuilders suffer some serious share price damage, a trading update from Bovis Homes (BVS) referencing Brexit uncertainty looks eerily timely.
While sales rates and house prices achieved were in line with expectations and roughly flat year-to-date, the company notes an increasing number of buyers are choosing the part-exchange option.
Bovis is down 6.6% to 972.2p and the rest of the sector follows suit, Persimmon (PSN) falls 5.8%, Barratt Developments (BDEV) slips 5.5%, Taylor Wimpey (TW.) is down 5.1%.
Other real estate related stocks are also on the back foot with British Land (BLND) falling 3.4% to 601.6p
Banking stocks also react negatively to the news with RBS (RBS) losing 5% to 236p, Barclays (BARC) falling 4% to 166p and Lloyds (LLOY) slipping 3% to 57p.
As the most domestically-focused stocks in the FTSE, banks and house-builders bore the brunt of the sell-off in June 2016 following the original vote to leave the EU.
If investors feel that the risks of a ‘no-deal’ Brexit have risen with today’s news it’s logical that these will be the stocks worst affected by selling pressure.
