Shares in banks, utilities and housebuilders all soar on Johnson victory
UK-focused companies listed on the London Stock Exchange enjoyed some of their biggest ever surges following confirmation that the Conservatives have won the General Election.
Businesses had spent most of the last three years in a state of limbo due to the political and economic uncertainty.
But investors appeared convinced that the election result will bring stability and protect businesses who were fearful of Labour’s nationalisation and new banking tax plans.
The listed banks were some of the biggest gainers in early trading, with Virgin Money, Royal Bank of Scotland, Lloyds Banking Group and Barclays all soaring.
Royal Bank of Scotland – which remains majority owned by the taxpayer – was the biggest riser, with shares up 11.3% or 26.2p to 258.5p.
It helped the FTSE 100, made up of several international giants, climb 1.5% or 112 points to 7,386.
The FTSE 250, which has more UK-focused businesses, jumped 4%.
Housebuilders, which have suffered from a major downturn in the construction sector due to the uncertainty, also enjoyed significant gains.
Persimmon led the risers on the FTSE 100, up 12.9% or 317.5p to 2,832p.
Rival housebuilders Barratt Homes, Crest Nicholson, Taylor Wimpey, Redrow and Bellway also rose.
There were also strong rises in energy and utility companies, with the fear of nationalisation removed.
SSE jumped 9.4% or 123.25p to 1,432.75p and British Gas owner Centrica rose 7.3%, up 5.88p to 86.54p.
BT, which had been under threat of seeing its Openreach division nationalised, also rose, by 8.7% or 16.47p to 205.6p, as did transport companies including Stagecoach, Go-Ahead Group and ticketing firm Trainline.
Craig Erlam, senior market analyst at OANDA Europe, said: “It doesn’t take a genius to guess which companies are flying this morning after that election result.
“Remove the threat of nationalisation and investors quickly flock back to the BTs, Royal Mails and National Grids of the world. And there’s plenty more. Investors in these companies will be breathing a huge sigh of relief this morning.”
But internationally focused companies on the leading index suffered falls as the strong pound knocked back shares.
With the pound rising in value, these businesses look “more expensive” to foreign investors.
Rat catchers Rentokil led the fallers on the FTSE 100, off 3.1% or 13.2p at 421.2p, followed by drugs firm GlaxoSmithKline down 2.45% and Johnnie Walker maker Diageo down 1.7%.
Other pharmaceutical giants that suffered included Reckitt Benckiser, Hikma and AstraZeneca.
Helal Miah, investment research analyst at The Share Centre, said: “The stock market’s reaction is far more mixed.
“Understandably, the more UK-centric stocks in the FTSE 250 are up at the open around 2%, but the FTSE 100 dominated by the global multinationals has actually opened lower by over half a percent.
“However, the utilities, which were under pressure beforehand, went into auction early on, but immediately when out of auction they all jumped significantly, reversing the half percent loss to a half percent gain to the top 100.”