The speculation is over - Boris Johnson has won the Conservatives the largest parliamentary majority since 1987. Brexit now seems a certainty by the end of January and the haze of concern over Labour’s plans for business and re-nationalisation has gone. The pound has surged against the dollar and the euro, which, in general terms, is a positive for domestic-oriented companies - and that’s what we’re seeing in the market so far….
To kick off, it looks like brokers were caught on the hop this morning - although shares in both AJ Bell (+7.4%) and Hargreaves Lansdown (+7.5%) are some of the sharpest risers in early trading this morning.
FTSE 100 - relief for housebuilders and utilities
Note that prices are moving quite wildly this morning - so what we’re seeing now may settle down later.
The FTSE 100 is currently up around 1.7%, with domestic stocks leading the charge, but international names largely unmoved.
Unsurprisingly - given the Conservatives’ promise of continued stimulus for new homebuilding - Taylor Wimpey (+13.2%) and Persimmon (+11.2%) are leading the FTSE 100 movers early doors - with Berkeley and Barratt not far behind (both up 9.5%).
But the big relief seems to be among the utilities - a sector that faced an uncertain future under a potential Labour government. SSE (+10.2%) leads the pack, followed by United Utilities (+8.9%), Centrica (+8.1%) and Severn Trent (+7.2%). National Grid - another company on the re-nationalisation list - has seen its shares bounce by 6.1%. Meanwhile, shares in BT, which was facing the possibility of having Openreach taken off its hands, are up 7.1%.
UK banks are also benefiting: Lloyds shares are up 7.2% and Royal Bank of Scotland is up 11%. It’s a big positive reaction to prospects for the UK’s domestic economy.
On the flipside, a number of blue chips are unmoved - especially those with an international focus and won’t benefit from the rise in the pound. Among them are oil stocks like BP and Royal Dutch Shell pharma groups like Glaxo, Astrazeneca and Hikma, as well as big names like Rentokil Initial, Reckitt Benckiser and Rolls Royce.
The mid-cap bounce is on
At the time of writing, the FTSE 250…
