FTSE 100 smashes through 6,600

Could this be the week that Brexit drops out of the headlines? Unlikely, and certainly not this session, given Wall Street is closed for Independence Day. Attention will shift to the US later this week, however, when we get the monthly jobs numbers. In the meantime, some familiar faces are leading the FTSE 100 above 6,600 for the first time since August 2015.

Last week's 7% gain was the FTSE 100's biggest since 2011, and a four-day rally worth 540 points was the best since 2008. And today, a quick-fire 35-point advance propelled the blue chip index to 6,612, its highest since 13 August.

Analysts at JP Morgan believe that, regionally, the FTSE 100 will "remain a surprise outperformer, currency hedged. Stay long FTSE 100 vs FTSE 250."

The leading index is trading 16 points lower at 6,561 this lunchtime, but higher metal prices and their safe-haven status have sent gold and silver miner Fresnillo up a further 7%, and Randgold Resources around 4%.

Antofagasta, BHP Billiton, Glencore and Anglo American are in demand, too. Defensives like utilities SSE and Severn Trent are extending their rally, and tobacco giants, drugs companies and the big overseas earners like Reckitt Benckiser are on investors' 'buy' lists.

Surprisingly, Lloyds, Royal Bank of Scotland and Barclays did well earlier, but gains were fleeting, and it's the health of the banking sector which may also knock Brexit discussion off the front pages, certainly in Italy.

Deutsche Bank analyst Jim Reid notes chatter there about possible liquidity guarantees and recapitalisations for Italian banks. "It looks like this one still has plenty of room to run," says Reid. Speculation about public funds being injected into the banking system would break the bail-in principles of EU regulation. To cap it all, there's a referendum on constitutional reform in Italy in October.

Back in the UK, there's further grim news for the construction sector, where the monthly purchasing managers' index (PMI) for June fell to 46 from 51.2 the month before. It's the worst performance for seven years and the first plunge under 50, the level below which indicates contraction, since April 2013.

The slump was blamed on a steep decline in residential building and a reduction in commercial work for the first time since May 2013. That's driven largely by uncertainty ahead of the EU referendum.

"Construction firms are at the sharp end of domestic economic uncertainty and jolts to investor sentiment, so trading conditions were always going to be challenging in the run-up to the EU referendum," said Tim Moore, senior economist at the report's author Markit.

"However, the extent and speed of the downturn in the face of political and economic uncertainty is a clear warning flag for the wider post-Brexit economic outlook. "House building activity was worst affected by the uncertain business climate in June, very closely followed by commercial work."

It explains why Taylor Wimpey, Persimmon, Barratt Developments and Berkeley Group are on the receiving end of another kicking Monday, all down between 3.5% and 4.5%. Real estate giants British Land and Land Securities have fallen sharply too.

Fading FTSE 100 retail kings Next and Marks and Spencer are also in the red. Clearly, the market does not expect much from the latter's first-quarter results on Thursday. Recent bad weather may have shifted plenty of brollies, but business will have been slow in the shorts and sandals department.

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