Sterling jumped over 1% over night at the prospect of a stronger victory for the Conservatives than predicted. The main reason provided by voters in news reports throughout the evening was for a conservative vote based on the fact that the government’s agenda was likely to stay consistent. Markets are already reacting positively as the conservatives establish their new government and the recent uncertainties over the election result disappears.
Darren Hepworth, Global Trading Director, TD Direct Investing, said:
“The markets are lively this morning. The shock news of a convincing Conservative lead and the potential for a more stable government has been welcomed by the markets. The Pound is up 0.69 cents and the FTSE is bouncing back after yesterdays’ shaky session opening at 6,933.74 up 1% on the open. It will be fascinating to see how traders and investors react post-election”.
This heat map from our Advanced Trading Platform shows the positive impact on the markets within just 15 minutes of market open this morning. The FTSE 250 was a sea of green, showing a jump in confidence and share price.
Please note that the heat map depicted is a snap shot of a moment in time, and is not a representation of past or future performance.
Stocks had rallied on Thursday afternoon after 5 week lows but still finished firmly in the red, as election-day jitters weighed on sentiment. The FTSE 100 ended the session down 0.67% at 6,886.95 having dropped as much as 1.8% in the morning session to an intraday low of 6,810.05 – its lowest intraday level since 2 April when it touched 6,801.27.
Utility and property shares are now expected to outperform on the news that the Conservatives will hold power, since the Labour Party had been proposing tougher regulation on those industries if they’d won the election (as highlighted in our article earlier in the week). However, Societe Generale on Thursday had recommended investors to steer clear of UK equities even beyond the election, despite their recent under performance. The bank cited fading growth momentum, currency swings and high exposure to the oil and gas sector as three reasons why the market is unattractive.
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