8th May 2015 06:39
LONDON (Alliance News) - UK stocks are set to open sharply higher on Friday as the Conservative party closes in on a majority in the UK election. The pound also rose overnight.
UK Prime Minister David Cameron appeared to be heading for a second term in office early as an exit poll and early results suggested his Conservative Party would win enough seats to form an effective majority.
"This is clearly a very strong night for the Conservative Party," Cameron said as the exit poll showed the party on course to claim 316 seats in the 650-seat parliament and later analysis suggested the party could win as many as 329 seats.
"We've had a positive response to a positive campaign," he said in a victory speech as he held his Witney constituency.
The BBC said the Tories, led by Prime Minister David Cameron, are now forecast to achieve a working majority of 329 seats. Ahead of the election, opinion polls had the Tories and Labour parties tied, but as the results came in overnight it became clear that Labour had fallen considerably short of expectations as it was all but wiped out in Scotland by the Scottish Nationalist Party and failed to make the gains it had hoped for in England.
"While the final results aren't yet in it is slowly becoming apparent that the Labour Party and Liberal Democrats have come up well short of their expectations. Given the contents of the Labour Party manifesto this early equity market and sterling surge is likely to be more relief that none of these measures will now come to pass," says Michael Hewson, chief market analyst at CMC Markets.
IG says futures indicate the FTSE 100 will open up 127.4 points at 7,014.3. The index slipped 0.7% to 6,886.95 on Thursday as equity markets reacted to a sell off in bond markets, particularly German bunds.
The pound rose to a high of USD1.5523 against the dollar overnight, its highest level since the end of February. Ahead of the market open sterling trades at USD1.5451.
"The pound has soared overnight since the initial exit polls suggested the Conservative victory was going to be much larger than previously anticipated. The Conservatives are seen as being more business friendly and more importantly, offer continuity in a country that last year experienced the fastest rate of growth in the G7," says Craig Erlam, senior market analyst at Oanda.
However, later in the day the focus will turn to US nonfarm payrolls at 1330 BST, which will likely see movements in the dollar.
On Wall Street Thursday, the DJIA ended up 0.5%, the S&P 500 closed up 0.4% and the Nasdaq Composite ended up 0.5%.
In Asia Friday, the Japanese Nikkei closed up 0.5%, the Hang Seng trades up 0.9%, and the Shanghai Composite is up 0.4%.
BG Group said its earnings and revenue in the first quarter of 2015 were substantially hit by the fall in the oil price which caused a poor performance from its production and exploration division. The FTSE-100 company, which is being acquired by Royal Dutch Shell, said its pretax profit for the three months to end-March was USD708 million, down from USD1.89 billion a year earlier.
InterContinental Hotels Group reported growth in global revenue per available room in the first quarter of 2015, boosted by a strong performance in all of its operating regions. The hotel operator, which owns brands including Holiday Inn, Crowne Plaza and InterContinental Hotels, said global revenue per available room grew 5.9% in the first quarter, driven by an increased rate of 3.4% and growth in all four of the regions it operates in.
Rolls-Royce Holdings maintained its earnings guidance for 2015, saying a ramp up in deliveries of Trent XWB engines for Airbus planes would help offset the impact of lower oil prices in its Land & Sea business. The aircraft and marine engine maker, which last year issued a string of profit warnings, said it expects its results to be weighted to the second half of the year.
In the economic calendar, UK trade balances data is at 0930 BST. Later in the day is US nonfarm payrolls, wage and unemployment data at 1330 BST.
By Neil Thakrar; [email protected]; @NeilThakrar1
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