In the 3 months since the Brexit vote, the UK 100 went from dire straights in the immediate aftermath to a bounce worthy of an Olympic gymnast as the foreign earners’ club lifted the index to post fresh all-time highs. But as we reach the home straight of third quarter earnings season, some of those companies that enjoyed the most impressive comebacks are starting to once again find themselves on the back foot. Is it time to ask if the post Brexit bounce has finally run out of steam?

Alongside the Pound’s capitulation as the UK voted to leave the EU, the FTSE 100 climbed to fresh all-time highs as two-thirds of the index’s constituents enjoyed a handsome translational gain as a result of their foreign currency-denominated earnings. Even those constituents with a predominantly domestic focus found themselves on the receiving end of a share price recovery as investment from abroad increased. Some of those domestic based sectors that saw the most impressive returns to form include the Housebuilders and the Banks, the top performers in each rallying by as much as 50% and 40% respectively.

However, having peaked at the beginning of September, as many of the Housebuilders reached their pre-Brexit price levels, their share prices are once again falling; the most notable collapse in price coming from Barratt Developments last Thursday having paid two dividend payments to shareholders, at one point falling as much as 8% over the trading session. Today Barratt remains 5% down on last Wednesday’s despite a reasonable recovery made on Friday.

That said, it may not be dark times ahead for UK companies. UK GDP figures released last Thursday showed that not only has the British economy avoided a recession – widely anticipated after the Brexit vote – but that it had in fact beaten growth expectations by 0.3%. The robustness of UK economic indicators in the months following the vote reflected this. Only today mortgage approvals in Britain reached a three month high as lending for dwellings beat expectations by £300m.

And some companies are still maintaining their bounces. Barclays, having posted consensus beating Q3 figures despite increasing one-off costs (such as that old nemesis PPI), has charged ahead to challenge 2016 highs whilst Housebuilder Bovis remains in its post Brexit uptrend channel.

On the basis of the evidence, the phenomenal two month recovery posted by UK companies as the Brexit dust settled may be finished for the majority, yet this doesn’t mean that their share prices will once again return to the lows of June and July. Instead, a slowing of the momentum may be occurring. Much the same as a ball bouncing up stairs, companies’ momentum may need to slow down in order to start once again.

The bargain hunt is over. The real growth perhaps only just beginning.

Henry Croft, Research Analyst, 31 October