Friday saw the largest one-day rise of the FTSE index since January this year. But the impact was more significant once you look at the sectors. Investors in any business that would have found itself under Ed Miliband’s microscope gave a big sigh of relief. In a trading session that was as remarkable as the 12 hours that preceded it, the political waves were felt in every corner of every dealing floor. Of the 100 constituents in the index, only four ended the day lower.
Energy firms, housebuilders, gamblers and banks all climbed strongly, dragging their blue-chip colleagues higher. Engineering giant Babcock, which has huge operations north of the border and would have been vulnerable to political interference in defence and nuclear sectors, led the charge with shares 9.39 per cent higher, up 93p at 1083p. Centrica, which would have been hit by a Labour price freeze, was second after rising 8.08pc or 20.8p to 278.2p. Glencore (0.25p down at 302.6p) and Randgold (11p down at 4764p) prevented the FTSE 100 from enjoying a clean sweep. The FTSE 100 rose 159.87 points to 7,046.82 points, while the FTSE 250 rocketed 487.97 points to 17,935.93.
All together more than £40bn was added to the value of Britain’s biggest companies Friday as investors cheered the Conservatives’ stunning victory in the General Election. On a day of euphoria in the City of London, the FTSE 100 jumped 159.87 points to 7046.82, increasing the value of blue-chip stocks by £40.7bn in a boost for savers with pension pots.
The FTSE 250 was also on the rise – soaring 487.97 points to a record high of 17,935.93 – as worries about a hung parliament or a weak Left-wing Labour government propped up by the Scottish National Party evaporated. Sterling charged above $1.55 and €1.38 as it clocked up its biggest gains for six years. The yield on ten-year UK gilts, a crucial measure of how much it costs the Government to borrow, fell to a low of 1.79 per cent having touched 2.07 per cent on election day.
The election result is a surprisingly market-friendly outcome and removes the risk that the economy suffers a prolonged period of political uncertainty. A report by think tank, the Centre for Economics and Business Research, said the Tory victory will add £2bn to the value of the economy this year. However, analysts warned that the prospect of a referendum on Britain’s membership of the European Union – as promised by David Cameron – could generate fresh uncertainty.