UK financials and Property are outperforming this morning on the back of weekend Brexit polls showing a shift back in favour of Remain. This has resulted in a surge in buying interest for the pound sterling and a relief rally for battered financials (banks, insurance) and housebuilders as investors price in a lower probability of event-risk attached to a UK exit from the European Union. Polls last week suggested the Leave camp taking an increasing lead which sent the currency and UK equities significantly lower given the more uncertain outlook.

The weekend news has thus served as a starting pistol for investors to wade in and start bargain hunting, re-fuelling hopes that the status quo will prevail. And while last Thursday’s tragic murder of Jo Cox look is being singled out as a turning point in the campaign, note some of the aforementioned poll data was taken before the MPs death. This suggests the swing in opinion may not simply be one of sympathy. It could be a combination of this and voter fatigue with the electorate tiring of an increasingly ugly debate. After that flotilla and ‘that’ poster early last week, perhaps a large group decided the whole thing had already gone too far. Recovery momentum for Remain may have already been on the rise. Perhaps it was the aggregate of last week’s events that sealed an early start to the traditional late-stage preference to leave things as are, rather than risk the uncertainty.

Mike van Dulken, Head of Research, 20 June