Blue-chip stocks in the U.K. rallied to a nine-week high Thursday investors bet that referendum voters would support the country’s continued membership in the European Union.
The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +1.67% leapt 1.2% to 6,338.10, with just seven components ending in the red. The index marked a fifth straight gain and logged its highest close since April 21, according to FactSet data. The index on Wednesday rose 0.6%.
The London benchmark moved a leg higher in midmorning trade Thursday after an Ipsos Mori poll showed 52% of respondents favoring the U.K. remaining in the EU, while 48% prefer a Brexit. An online survey from Populus put the “remain” camp at 55% compared with 45% for the “leave” side.
Bookmakers reported heavy bets in favor of a “remain” victory.
The FTSE 100 did pare gains in afternoon trade before resuming its advance into the close.
“If you look at the constituents [that ended lower], there’s nothing there that indicates a change in sentiment or what’s going to happen,” when the vote outcome arrives early Friday morning, said Tony Cross, market analyst at Trustnet Direct.
Among Thursday’s decliners, luxury-goods retailer Burberry PLC /zigman2/quotes/205386705/delayed UK:BRBY +2.30% fell 2.1%, utility National Grid PLC shed 0.4% and betting firm Paddy Power Betfair PLC dropped 4.6% after a three-day run of gains.
“The City seems to believe that it’s still going to be a ‘remain’ vote tonight,” Cross said.
Shares of exchange operator London Stock Exchange Group ended 3.1% higher. They had for a while topped the FTSE 100, indicating some investors believe that “if we do [exit the EU] then the LSE-Deutsche Börse deal collapses,” he added.
The midcap FTSE 250 index /zigman2/quotes/210598417/delayed UK:MCX +1.56% surged 1.7% to close at 17,333.51. More than half of revenue from companies comprising the midcap index are linked to the U.K. economy compared with around 28% exposure for the larger-cap FTSE 100, according to FactSet.
Banks: Bank stocks pushed higher, with the financial sector in focus as British banks with overseas operations can use passporting rules to easily access EU markets. HSBC PLC /zigman2/quotes/203901799/delayed UK:HSBA +2.09% /zigman2/quotes/208272822/composite HSBC +2.11% popped up 2.4%, Standard Chartered PLC /zigman2/quotes/200125072/delayed UK:STAN +2.63% rose 2% and Barclays PLC /zigman2/quotes/208409333/delayed UK:BARC +3.29% /zigman2/quotes/206581728/composite BCS +3.98% picked up 2.7%.
Separately, a Reuters report said Barclays stopped accepting clients’ currency stop-loss orders on Thursday in an effort to limit its exposure to losses that could follow the results of the Brexit vote. A stop-loss order closes out a client’s position if its value falls below a predetermined level.
Sterling : The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.0715% was whipped around again Thursday. It jumped to its highest level of 2016 at $1.4947 after the Ipsos Mori poll, up from $1.4706 late Wednesday. Intraday, sterling slipped below $1.48 before recovering to $1.4813.
The pound “was looking exhausted after such a huge bounce,” said Jameel Ahmad, head of market research at FXTM, in emailed comments.
Even if the remain camp wins, Ahmad doesn’t see the pound sustaining a move much higher above $1.50.
“U.K. economic growth is slowing down as a whole. Also, the dollar should see some support following a ‘remain’ outcome as the Federal Reserve would have one major less reason to delay U.S. interest rate increases,” he said.
Other movers: Tesco PLC /zigman2/quotes/203761082/delayed UK:TSCO +0.61% rose 0.8% after the supermarket chain posted a 0.9% rise in same-store sales during the first three months of fiscal 2017. That compared with a decline of 1.3% in the same period a year ago. Tesco also said it’s agreed to sell its Harris + Hoole coffee chain.
Shares of defense contractor BAE Systems PLC ended up 0.3%. They had fallen earlier Thursday after a ratings downgrade to hold from buy at Berenberg.