Pound and shares soar as Brexit fears ease – as it happened

But here’s the key question:

On that note, it’s time to close up. Thanks for all your comments, and we’ll be back tomorrow as we continue the run up to the EU referendum and find out if indeed the market rally can last.

Volatility surrounding this week’s vote on whether the UK leaves the European Union has continued, with shares and the pound surging on signs that the Remain camp was regaining lost ground, recovering from their recent slump.

The FTSE 100 saw £47.5bn added to the value of the UK’s top companies, with the index up more than 3% - its biggest daily rise since February.

The pound recorded its biggest one day gain since the financial crisis of 2008, up more than 2% agains a basket of currencies.

Meanwhile oil rose more than 2.4% to $50.35 a barrel, helped by the latest on the referendum and a survey from data firm Genscape pointing to a fall in US crude stocks.

The final scores in Europe showed:

• The FTSE 100 jumped 182.91 points or 3.04% to 6204.00
• Germany’s Dax soared 3.43% to 9962.02
• France’s Cac closed 3.5% higher at 4340.76
• Italy’s FTSE MIB added 2.54% to 17,353.45
• Spain’s Ibex ended 3.41% higher at 8647.1
• In Greece, the Athens market rose 5.4% to 586.55

On Wall Street, the Dow Jones Industrial Average is currently up 1.09% or 192 points.

Jasper Lawler, market analyst at CMC Markets, said:

Global markets have had a Bremain bounce. A new optimistic tone has taken hold at the beginning of the final week before the Brexit referendum. A phone poll from Survation and an internet poll from YouGov showing a lead for the Remain side has prompted a perception that the Brexit tide has turned.

A change in bookmaker’s odds in favour of the UK remaining in the EU has been another contributor to fading fears of a Brexit in financial markets.

The FTSE 100 has closed 3% higher at 6204.00 after the latest polls suggested that the chances of the UK voting to leave the European Union had receded somewhat.

This is the biggest one day rise since 12 February this year, although the index has come off its best levels of the day, when it saw the largest daily increase since last August.

And it has only regained the levels seen on 9 June, before the polls started showing big gains for the Leave campaign.

Sterling is now 2.3% higher against the dollar, trading around $1.47, its highest level since January this year.

The pound is also up 2% on the day against the euro at 77.07p a euro.

Buy oil if the UK votes for Brexit, according to Bjarne Schieldrop, chief commodities analyst at Nordic Bank SEB:

Last week we saw a taste of what might happen to markets if the UK votes to exit the EU. Along a broad based sell-off across markets, Brent crude sold 11% off from the recent peak of $52.86 a barrel to a low last week of $46.94. There was a clear exit from long speculative positions and an increase in short positions in WTI crude [the US benchmark].

In the event of a Brexit, we expect Brent to sell down to between $40 a barrel and $45, which would be a great buying opportunity. The sharp rebound in the oil price during the last two days is a good indication of the solid appetite for buying oil whenever it drops below $50 a barrel. While a Brexit would be damaging for the Brent crude price in the short term, we think that its impact on oil demand would only be marginally negative. While overall sentiment in financial markets could be depressed for quite some time, the supply/demand balance for oil would not be impacted very much.

If we get a second negative round of sell-off ahead of the vote this week, with Brent crude down towards $45 a barrel, we view it as a good buying opportunity. If a Brexit then actually happens, Brent crude would sell further down, but it would not stay there long.

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On Wall Street, the market has now indeed settled down, and the optimism continues.

The Dow Jones Industrial Average is now up 252 points or 1.4%, while European markets are holding on to the bulk of their gains.

In the general risk-on attitude among investors, oil is also on the rise, with Brent crude up 1.6% at $49.97 a barrel.

Carmaker Nissan has said it will take legal action against the official Leave campaign for using its logo in a leaflet calling on voters to back Brexit. Reuters reports:

On one “Vote Leave” flyer, the firm’s logo appeared next to those of four other major companies including Unilever and fellow carmaker Vauxhall with the message: “Major employers ... have all said they’ll stay in the UK whatever the result of the referendum.”

Nissan, which says it would prefer Britain to remain in the EU, said it would be issuing legal proceedings on Monday in Britain’s High Court to stop ‘Vote Leave’ from using its name and logo and to “prevent them making any further false statements and misrepresentations concerning Nissan.

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America’s stock market is joining the global rally, as nerves over Thursday’s EU referendum recede.

The Dow Jones index has jumped by 202 points, or 1.1%, as the chimes of the Wall Street bell ring out.

It will take a few minutes for trading to settle down, though.....

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More analysts are predicting today that ‘don’t-know’ voters will decide to back the status quo in Thursday’s referendum.

That’s a key factor behind the flood of money into shares, and the British pound, today.

Mujtaba Rahman of Eurasia Group says that many referendums across the world show that undecided voters don’t “break evenly”.

The British public is risk-averse and, absent a well-articulated plan for EU exit, is still more likely to opt for the status quo than a leap into the unknown. Historical analysis of six previous referenda in the UK (most prominently on the Alternative Voting system, devolution and Scottish independence) since 1975 show a tendency for a hefty swing towards the status quo in the run-up to polling day – a trend we are beginning to see from this weekend’s polling.

Derek Halpenny, the European head of global market research at Bank of Tokyo-Mitsubishi, makes a similar point (via Reuters)

The momentum has changed, and perhaps this is the first sign of what a lot of the polling experts had been suggesting,which is that the ‘don’t know’ portion was going to be crucial and historically there tends to be a shift towards the status quo in the final days before a referendum.

I think that’s what the market is reacting to.”

The stock market rally is hitting new heights, driving the FTSE 100 index up by 200 points today to 6223.

Unless the mood changes, we could be looking at the biggest one-day leap in 10 months.

City expert Louise Cooper has cautioned against assuming that the EU referendum is now “in the bag” for the Remain campaign.

She says:

Firstly, it should be no surprise to read that markets get things wrong.

Secondly this move is driven by computer trading, with computer algorhythms driving the move higher. As various technical levels are breached, more buy orders come in and momentum gathers. The “real players” in the market - corporates and pension funds - are mostly on the side lines....

The sterling rally does not suggest that the Remain campaign has it in the bag.

This is going to be one hell of a week.

Louise also confirms that the surge in the pound today is quite remarkable:

The pound has moved from buying one dollar forty cents on the lows of Thursday to buying $1.46 now...

As one FX strategist said to me this morning: “I’d normally expect to see that size of move in a month”.

Ladbrokes and William Hill have also cut their odds on Remain winning Thursday’s vote (meaning they see it as more likely)

The Brexit referendum is already the biggest political betting event in Betfair’s history (it was founded in 1999).

Betfair spokesperson Naomi Totten reports that more than £40m has now been staked on the result, including one £315,000 wager on Remain.

Totten says:

“With just three days left until the vote the Betfair market momentum is now all behind Remain, which was backed as low as 1/5 this morning, with one customer backing it to the tune of £100k.

This market continues to mimic the pattern of the Scottish Referendum, where historical confidence in the eventual ‘No’ vote slipped slightly ten days before referendum day only to resettle in the week of the vote.”

One City fund manager, though, suggests investors shouldn’t get carried away...

City investment management company Charles Stanley has warned customers that they could find it harder to trade on Friday morning.

They believe there will be massive demand to buy and sell shares and currencies, as the referendum result becomes clear.

Here’s an email sent to clients today:

This Thursday – June 23^rd2016 – the country goes to the polls to decide on Britain’s future in Europe. It is a simple ‘yes’ or ‘no’ vote but we are expecting considerable volumes being traded through the Charles Stanley Direct platform as investors react to the news.

Whatever the results, we anticipate that we may experience higher volumes and more market volatility than usual on the 23^rd June and in the days following the vote. The immediate impact is likely to be felt most directly by those of you wishing to trade shares during such market conditions.

It is possible that market makers will limit the size of orders that can be placed online and be slow to answer phones. In practice this may mean that you are more likely to have to place a limit order instead of a market order and it may take longer for us to be able to place such trades. Foreign exchange rates could also witness fluctuations and this has the potential to impact overseas trades placed during this time. We ask for your understanding if you are thus affected.

Our experienced Edinburgh-based helpdesk may also receive a surge in call and query volumes. We will respond to queries as quickly and thoroughly as possible, but once again we would be grateful for the forbearance of our clients in the event of unusually high volumes.

Here’s the best-performing major shares in London this lunchtime:

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Time for a catch-up.

London’s stock market is on a tear this morning, as investors react to signs that Britain is more likely to vote to stay in the European Union.

The FTSE 100 index of leading shares has surged by 196 points, or 3.2%, by lunchtime in the City. That means around £50bn has been wiped back onto the index, which is on track for its biggest one-day rise since last August.

Financial stocks are among the big risers, with Royal Bank of Scotland gaining 7.8% and Lloyds Banking Group up 6%. Building firms are also up, led by Taylor Wimpey (up 7%).

Traders are citing weekend polls, showing a pick-up in support for the Remain campaign in the last few days. Three polls gave Remain a small lead, and one had the two sides tied.

Mihir Kapadia, CEO at Sun Global Investments, explains:

“Today’s markets opened with a strong risk-on sentiment as news over the weekend suggests that the Remain camp is gaining momentum in the UK ahead of this week’s EU referendum”.

Betfair, the online gambling site, reports that the ‘implied odds’ of the UK remaining in the EU have risen to around 77%.

This has forced some investors to cut insurance which they’d taken out against Brexit.

Sterling is also bouncing back, and on track for its biggest one-day rise since 2009.

The pound is up by 1.8% right now at $1.4622 against the US dollar, a gain of over 2.5 cents.

Analysts at RBC Capital Markets have suggested that some voters are returning to the ‘status quo’, and deciding against Brexit.

Others have warned, though, that there could be further twists before Thursday’s vote.

Laith Khalaf, senior analyst at Hargreaves Lansdown,

‘Waves from the Brexit vote are buffeting the UK stock market, tossing it up and down as the opinion polls shift this way and that. Until the vote is over we can expect more price swings, as markets struggle to price in a unique event that carries with it such a high degree of uncertainty.

If you want to get an idea of what stocks will do well in the event of a vote to stay in the UK, it’s worth taking a look at today’s FTSE leader board. The market has clearly identified financials and house builders as beneficiaries of a vote to remain in the UK, with a Sterling rally also indicating how the currency might move if we vote to remain in Europe.

The move comes after David Cameron urged the public to “stay and fight” in the EU last night.

Overnight, a clutch of Nobel-prize winning economists warned against Brexit.

And the head of Germany’s trade body has warned that it would be a ‘catastrophe’ if Britain left the EU.

Here’s a handy chart, showing how the share prices of Europe’s largest 600 companies (dark blue) have tracked the twists and turns in the EU referendum race.