THE PROSPECT OF A CONSERVATIVE GOVERNMENT has seen the markets swell with confidence as greater certainty over a continued economic policy sets in.
The Conservatives have campaigned on a largely pro-business platform, and over the last parliament lowered the headline rate of corporation tax to 20% from 28%. That policy has chimed well with the City and big business.
The FTSE 100 gained more than 1.6% in early trading as investors absorbed UK election results suggesting David Cameron (pictured) will remain as prime minister.
Energy and banking companies led the rally – two of the sectors that had been seen as vulnerable to increased regulatory scrutiny and a higher tax burden under a Labour government.
Centrica, the owner of British Gas and one of the UK’s main energy providers, was up 7.4% to 276.5p. SSE was up 5.1% at 1644p.
Lloyds Banking Group was the best-performing financial stock, up 7% to 88p, while the Royal Bank of Scotland gained 6% at 352p.
The FTSE 250 rose even more steeply 492.06 points on yesterday, while the pound’s strength rose almost 2% to $1.54 against the dollar as the results came in, before falling back slightly.
The biggest threat of turmoil relates to uncertainties over the US November elections. The markets will have to seriously consider the possibility of Donald Trump being elected
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The abrupt swing - from gloom and despondency after the Brexit result became known, to a mood of complacency now - is premature and deceptive, writes David Kern