By Carla Mozee, MarketWatch
A key gauge tracking U.K. midcap stocks briefly traded Wednesday above its close on June 23, the day of the Brexit vote.
The FTSE 250 /zigman2/quotes/210598417/delayed UK:MCX +0.85% found support from the real estate sector following signs that the vote last month to leave the European Union hasn’t notably crimped business.
The gauge finished up 1.2% at 17,265.91, after spending time Wednesday above its close of 17,333.51 on June 23. That was the day U.K. voters went the polls in an historic referendum asking whether the country should remain a member of the European Union. The eventual win by the Leave side put the country on its current course of leaving the bloc.
The FTSE 250 has been in focus as about 52% of revenue from the index’s companies is linked to the British economy, more than the roughly 28% exposure for the larger-cap companies in the blue-chip FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.45% /zigman2/quotes/210598409/delayed UK:UKX +0.45% , according to FactSet data.
“The U.K.’s mid cap index has staged an impressive recovery since the referendum, but there have still been casualties of the decision to leave the EU, with around a fifth of the names in the index showing double-digit price declines since the result was announced,” said Laith Khalaf, senior analyst at Hargreaves Lansdown, in a note.
The FTSE 100 on June 29 reclaimed its pre-Brexit level. Part of the faster pace of recovery for large cap stocks compared with midcaps stems from the slide in the British pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.4103% . With more exposure to overseas revenue, sterling’s slump makes exports from multinationals less expensive to buy for holders of other currencies.
The FTSE 100 on Wednesday closed at a fresh high for 2016.
Property push: Investors appeared to find comfort in updates issued Wednesday about British economic conditions. Shares of Rightmove PLC /zigman2/quotes/201303150/delayed UK:RMV +0.87% leapt 8.1%, their best session in about a month, after the online real estate sales site said its board has “confidence in delivering expectations for the current year,” even with the uncertainty that still surrounds the Brexit process.
“Rightmove’s trading in July has been in line with the strong monthly revenue achieved in the first half of the year,” Rightmove said.
Real estate shares have been among those hurt by worries among investors that buyers would be scared off following the Brexit vote and as the value of the pound has slumped against its major rivals, including a recent 31-year low against the U.S. dollar.
Some of the FTSE 250’s top performances Wednesday came from home builders Crest Nicholson Holdings PLC /zigman2/quotes/207992108/delayed UK:CRST -1.28% and Bellway PLC /zigman2/quotes/208360300/delayed UK:BWY -0.55% , as shares surged 9.6% and 6.7%, respectively. Real estate services provider Savills PLC /zigman2/quotes/202124149/delayed UK:SVS +0.33% tacked on 6.3% and Zoopla Property Group PLC moved up 5.2%.
GDP gain : Meanwhile, stocks stayed higher after the first reading of second-quarter U.K. gross domestic product showed growth accelerated in the runup to the Brexit vote. The 0.6% expansion rate was higher than fourth-quarter growth of 0.4%, and above the 0.4% consensus produced by a Wall Street Journal survey of economists.
While the quarter was marked by a strength in industrial output, Markit’s July manufacturing and services data released last week was “raising a recessionary spectre over the forthcoming Bank of England policy meeting,” said Neil Wilson, markets analyst at ETX Capital, in a note.
For more on the impact of Brexit, see Financial News: Brexit, which covers the fallout from the U.K.’s vote to leave the European Union.