19th Sep 2014 16:08
LONDON (Alliance News) - UK stock indices made gains Friday after the Scottish public removed the risk of a break-up of the UK by voting "No" to the question of independence at the historic referendum on Thursday.
A huge 84% of the electorate turned out to vote in the Scottish referendum; 55% voted in favour of staying a part of the United Kingdom, while 45% voted for a split. The final vote turned out to be a more convincing "No" than recent opinion polls has suggested and served to remove the uncertainty that has been hanging over the London market for the last few weeks.
Scotland's first minister Alex Salmond, who headed the "Yes" campaign, announced later on Friday that he intends to step down.
While the stocks most exposed to Scotland performed well, the mining sector put a cap on the London market gains amid continued weakness in precious metal prices, and a little profit taking before the weekend also wiped out some of the early gains.
The FTSE 100 gapped higher at the open and then remained fairly stable for most of the day before consolidating at the close, closing up 0.3% at 6,837.92. The more domestic-orientated FTSE 250 saw a stronger gain, closing up 0.8% at 15,859.10. The AIM All-share closed up 0.5% at 762.29.
Royal Bank of Scotland was a strong blue chip gainer, rising 2.5% out of relief that it won't have to relocate south of a new border. RBS had moved to reassure investors in the run up to the vote by saying that it would move its head office to England in the event of a "Yes" vote. While this provided some stability for the stock, it would have been an expensive adjustment for the company; a statement from the bank declaring "business as usual" after the final vote was announced was well received by investors.
Most of the other stocks with significant Scottish exposure that have been weighed on in recent days also saw put in a strong performance Friday. Lloyds Banking Group closed up 1.3%, Babcock International Group gained 2.4%, and Standard Life rose 1.4%.
Major European markets made more modest gains Friday, with the French CAC 40 closing up 0.2%, and the German DAX 30 closing up 0.3%.
While the big news in the UK Friday has been the Scottish referendum, across the pond the biggest initial public offering in US history took place Monday. Chinese e-commerce business Alibaba priced its IPO on Thursday at USD68 per share. The stock took more than two hours to start trading, finally opening considerably higher at USD92.70.
After the European close, the US markets continue mixed, with the DJIA up 0.3%, the S&P 500 up 0.2%, and the Nasdaq Composite down 0.1% amid suggestions that investors are selling other technology stocks to buy Alibaba.
Back on the London market, the mining sector provided a drag on the gains being made elsewhere as precious metal prices continues to fall. The price of silver fell to USD17.824 per ounce, marking its lowest level in four years. Gold continues to languish at its lowest levels of the year, reaching USD1,214.15 per ounce Friday.
The weakness sent the FTSE 350 mining sector down 0.9%. Randgold Resources ended down 1.6%, Rio Tinto down 1.6%, BHP Billiton down 1.3%, and Anglo American down 0.9%.
Domino Printing Sciences gained almost 10% Friday, ending the week as the best-performing FTSE 250-listed stock, after the inkjet and laser printing company said trading in the year-to-date has been ahead of the year before, with sales in the ten months to August 2014 up 4% year-on-year. The company said underlying growth in its core business was up 9.0%, although it took a 5% hit from foreign exchange movements.
Infinis Energy gained almost 9%, boosted by the Scottish vote. In a statement Friday, Infinis said the result "preserves the status quo of an integrated UK energy market and the UK-wide applicability of the RO-legislative framework in support of continued investment in renewable energy."
In the currency market, sterling traders appeared to anticipate the "No" vote in Scotland from very early in the morning and had pushed the pound up to a two-week high of USD1.6525, and a two-year high against the dollar of EUR1.28. However sterling gave up all of its earlier gains after the vote was announced and as the day progress. At the time of the equity market close it is lower on the day, trading at USD1.6315 and EUR1.2704.
By Jon Darby; [email protected]; @jondarby100
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