Brexit-Exposed U.K. Sectors Sink as Raab's Exit Surprises Stocks

(Bloomberg) -- Shares in U.K. companies most exposed to Brexit risk slid in London after news that Brexit Secretary Dominic Raab had resigned in protest at the divorce deal agreed between Prime Minister Theresa May and the European Union, putting the deal in peril.

Real estate stocks took the brunt of the decline with the likes of Taylor Wimpey Plc and Persimmon Plc sinking more than 5 percent. High street lenders like Royal Bank of Scotland Group Plc and Barclays Plc fell by similar amounts. Both sectors have been hit by fears that a Brexit-induced slowdown in economic growth would hinder business.

But while domestic-focused members of the mid-cap FTSE 250 index slid, many blue chip constituents of the FTSE 100 edged higher as the pound slumped against other major currencies. Those firms, like health-care majors GlaxoSmithKline Plc and AstraZeneca Plc tend to fare better when the pound is cheaper, given their dependency on exports.

Sterling’s drop also supported commodities firms like miners which earn much of their revenue in dollars, Keith Temperton, a sales trader at Tavira Securities noted in emailed comments.

One other sector declining was retail, which has grappled with waning consumer confidence since the 2016 referendum at a time when it’s already attempting to withstand the growing threat of online shopping. FTSE’s main retail gauge slumped more than 3 percent as news of Raab’s departure broke.

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