Yesterday was a positive day for the stock market, with the FTSE 100 now trading close to a one year high, led by domestically-focussed stocks, and following on from second quarter UK GDP growth coming in ahead of expectations at 0.6%. Even the FTSE 250 is back in the game, and is now trading close to its pre-Brexit level.

Longer term total returns from the UK stock market are also looking pretty good right now, though clearly there has been some choppiness along the way, and no doubt there will be more to come.

Source: Lipper to 26^th July 2016

Laith Khalaf, Senior Analyst at Hargreaves Lansdown commented:

‘Today (27/07) there’s been positive news for stocks at both a micro and macro level. Domestically-focussed stocks started the day on the front foot, with Taylor Wimpey, Rightmove and ITV all posting robust results, and GlaxoSmithKline announcing £275 million of investment in the UK. The strong UK GDP figures added to the confident mood, as stock prices shrugged off the Brexit blues.

However, all today’s figures look back to a period predominantly before the referendum, and as such they give us little indication of what the vote actually means for the economy, or the companies exposed to it. They do at least tell us the economy has some momentum going into the implementation of Brexit, and may yet give the Bank of England pause for thought when they decide whether to cut interest rates next week.

Indeed much of today’s rise in GDP was down to the manufacturing sector, which recorded its strongest growth in six years. Ironically, the makers appear to be marching now George Osborne has left Number 11. Business and financial services grew, but at a slower rate than in the first quarter, whereas construction output went backwards. We can see uneasiness over these sectors reflected in the stock market, with UK banks and house builders still licking their wounds from the heavy share price falls sustained since the Brexit vote.

The UK’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.’

(Source: Hargreaves Lansdown)

Private investors are seeing this morning’s market falls as a buying opportunity. 80% of the trades placed through Hargreaves Lansdown’s share dealing service this morning were purchases. This compares to around 60% on an average day.

Senior Analyst at Hargreaves Lansdown, Laith Khalaf commented: ‘Private investors are clearly seeing today’s market fall as a buying opportunity, and are out in force bargain-hunting. The most popular stocks are also those which have seen their prices hit hardest this morning, namely the banks and house builders.

We know that private investors have been sitting on the sidelines until after the referendum, and early indications are there may be some buying activity now the market has dropped.’

The UK stock market fell sharply this morning, but has since staged a bit of a recovery, though it is still down around 4.5%. The FTSE 100 has been bailed out by a falling pound, but the FTSE 250 mid cap index has not been so lucky- it has fallen by over 8% by lunchtime, because it is more domestically focussed and has fewer overseas earnings. Just to give some context to the fall, the FTSE 100 is still currently trading at above 6,000, around 10% higher than the low of 5,537 it fell to in February of this year.

The FTSE 100 has fallen further in the past. On Black Monday, in 1987, it fell by 11%. On 10^th October 2008, it fell by 9%. On 11th September 2001, it fell by 6%.Nonetheless, today’s fall so far makes it one of the worst days the Footsie has witnessed.

Laith Khalaf says: ‘The Footsie has been bailed out by the Sterling collapse, because all its international revenues streams are now worth that much more in pounds and pence.

Financials and house builders are bearing the brunt of the pain, with Lloyds bank being one of the biggest fallers. It’s probably safe to say the public sale of the bank is now firmly in the long grass, and the return to full private ownership of both Lloyds and RBS has been knocked off course.

It’s also been a bad day to be a mid-cap company - the FTSE 250 is suffering to a much greater extent than the blue chip index. Mid-cap companies have sold off harder because they are perceived to be more risky, and tend to be more domestically-focused with fewer overseas earnings.’The 10 most popular shares bought by private investors this morning, ordered by the number of trades placed are:

Below are the top ten funds purchased, ordered alphabetically. Tracker funds have proved very popular today as investors have simply sought blanket market exposure. However the tried and trusted names of the industry are proving popular too.

(Source: Hargreaves Lansdown)