8th May 2015 07:40
LONDON (Alliance News) - UK stocks opened sharply higher at the open Friday and the pound rose as the latest election results showed the Conservative party is heading for a slim outright majority.
With results in 610 seats in the 650-member House of Commons declared, the ruling party had won 301 seats. Prime Minister David Cameron says he is hopeful of a slender majority, with BBC analysis suggesting that the Tories will win 329 seats, just six seats more than the required simple majority.
The opposition Labor Party suffered a major setback, losing 25 seats and is failing to make enough gains in England and Wales. Having won 221 seats, the party is on course for its worst result since 1987, reports say. It was almost wiped out by the SNP in Scotland.
The FTSE 100 trades up 1.5% at 6,993.78. The FTSE 250 surged to a new record high, moving over the 18,000 mark for the first time, just under three months after it surpassed the 17,000 mark. It has since come off slightly and currently trades up 2.5% at 17,888.57. The AIM All-Share trades up 0.2% at 749.81.
"Putting to one side for now the longer-term uncertainties that the Tory pledge for an 'In/Out' referendum by end-2017 will pose, as well as the difficulties of governing assertively with a very small majority ? illustrated by the struggles of the Major administration in the 1990s ? the markets have unsurprisingly welcomed the result," says Chris Scicluna, head of economic research at Daiwa Capital Markets.
"The diminished near-term political uncertainty, coupled with the lip-service paid by the Conservatives to a more prudent fiscal stance and their less interventionist micro policies, is unsurprisingly already being reflected in a stronger sterling, and firmer Gilt and equity markets are set to follow too," Scicluna adds.
Leading the gains in the main indices are banks, housebuilders and utilities, with Lloyds Banking Group one of the biggest FTSE 100 gainers up 6.0% at 87.05p, having hit its highest price since November 2008 in early trade.
Societe Generale analyst James Invine says a Conservative victory will be positive for banks as the latest election results show the party heading for a majority, as it means that Labour's plans to raise bank levies will not materialise.
Only Royal Dutch Shell 'A' trades lower in the FTSE 100, and only four stocks in the FTSE 250 trade in the red.
Sterling surged higher against the dollar, hitting a high of USD1.5523 against the dollar overnight, its highest level since the end of February. It currently trades at USD1.5479.
By Neil Thakrar; [email protected]; @NeilThakrar1
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