Britain

FTSE 100 gets election and trade boost, but the real winner is the FTSE 250 which leaps 800 points

  • FTSE 100 index up 107 points
  • Sterling jumps on Tory victory
  • FTSE 250 leaps 825 points

8.40am: City in bullish mood

The FTSE 100 index celebrated a thumping election win for Boris Johnson and the prospect of a US-China trade deal also lit the touchpaper under blue-chip stocks Friday – although investors had to wait a bit as Londons price setters made sense of the mood.

After 45 minutes of trading, the UK benchmark was up around 107 points at 7,380.

The Tory Party's victory in the polls lifted the grey pall over the Square Mile created by Brexit uncertainty, while the promised cessation of Sino-American trade hostilities only added to the pre-Christmas merriment.

Registering rises of 15% and 12% respectively were British Airways owner IAG (LON:IAG) and builder Persimmon (LON:PSN), while the financial stocks led by Legal & General (LON:LGEN) and state-owned Royal Bank of Scotland (LON:RBS) were also in demand.

However, a sharp rise in the pound following the exit poll last weighed on the UKs foreign currency earners. So, topping the losers list were stocks such as druggies GlaxoSmithKline (LON:GSK) and AstraZeneca (LON:AZN) as well as international drinks firm Diageo (LON:DGE) and household goods giant Unilever (LON:ULVR).

“We are expecting pro-cyclical and more domestic shares to dominate the gains on the FTSE 100 today,” said Jasper Lawler of London Capital Group.

“That will include the likes of banks and homebuilders. As a better reflection of the domestic UK economy, which stands to benefit from greater clarity on Brexit and the economy, the FTSE 250 index looks on course for a record high.”

Indeed, the mid-cap index shot up a whopping 825 points to 21,618.07.

Proactive news headlines:

Hurricane Energy PLC (LON:HUR) expects it will have brought in some US$165mln of revenue by the end of 2019, thanks to the continuing successes of the Lancaster field early production system (EPS). It comes as the Lancaster EPS is seen performing strongly which, for investors, is in contrast to the disappointing end to the 2019 drill campaign at Hurricanes 50% owned Greater Warwick Area.

Anglesey Mining PLC (LON:AYM) said in its half-year results statement it remains encouraged by the continued support for iron ore prices. The period under review – the six months to the end of September – saw consultant QME carry out an agreed programme of design, engineering and optimisation studies relating to the future development of the Parys Mountain zinc, copper lead project, located on the island of Anglesey in Wales.

Ferro-Alloy Resources Limited (LON:FAR) has expanded its existing vanadium concentrate processing operations as it continues financing discussions to develop its Balasausqandiq project in Kazakhstan. The company said its production in October had also reached a record of 18.2 tonnes of concentrate and it is expecting a “significant increase in monthly production” from mid-December as the new equipment becomes fully operational.

ImmuPharma PLC (LON:IMM) announced that its shares will be dual-listed on Euronext Growth Brussels with effect from 19 December 2019, following approval by the European exchange, a move which will bring the company “additional visibility among European investors”. The AIM-listed specialist drug discovery and development company said the new listing – under the ticker ALIMM – does not affect the trading of its shares on AIM in London, nor is there any intention for it to raise additional funds from either AIM or Euronext.

Custodian REIT (LON:CREI), the UK property investment company, has announced the appointment of Hazel Adam as a non-executive director with effect from 12 December 2019. The company noted that Mrs Adam was an investment analyst with Scottish Life until 1996 and then joined Standard Life Investments as a fund manager specialising in UK and then Emerging Market equities; in 2005 she joined Goldman Sachs International as an executive director on the new markets equity sales desk before moving to HSBC in 2012, holding a similar equity sales role until 2016.

7.00am: FTSE 100 called higher

It was the result the City wanted – a Conservative government with a majority verdict – and the FTSE 100 is set to open higher accordingly.

The fact that the rise is only expected to be around 27 points at 7,300 can be ascribed to the reaction of foreign exchange traders to the result, who bid up sterling to around US$1.3476, more than three cents higher against the dollar.

With so many Footsie constituents working for the Yankee dollar that sort of currency appreciation will hit the profits of many of them.

With 6 seats yet to declare, the Conservatives have 361 seats – a gain of 66 seats – and Labour 202 – which lost 42 seats.

The Scottish Nationalist Party, with 48 seats, had a good night although not as good as the exit polls suggested, raising the prospect of increased pressure on the UK government to sanction another referendum on Scottish independence.

The Liberal Democrats had a bad evening, with just 11 seats; party leader Jo Swinson was among those who lost her seat.

US markets yesterday had a very strong day with the Dow Jones Industrials Average jumping 221 points to close at 28,132 while the S&P 500 advanced 27 points to finish on 3,169, as hopes rose that the US and China have agreed not to introduce new trade tariffs this weekend.

Asian markets picked up the baton with Japans Nikkei 225 up 611 points at 24,036 this morning and Hong Kongs Hang Seng index 589 points to the good at 27,586.

Back in the UK, the focus should only be on the General Election post-mortem, which is probably just as well as there is little in the way of company news.

Full-year results from Hollywood Bowl Group PLC (LON:BOWL) will offer sub-editors a few opportunities for skittles based puns.

On the macroeconomic fronRead More – Source