The FTSE100 and FTSE250 have taken off this morning in a relief rally after the Conservative Party confounded all expectations to gain a majority, with Labour suffering a disastrous collapse in Scotland.
For the best part of 12 months the following sectors of transports, utilities, banking and house builders have been weighed down by concerns that the Labour Party's manifesto promises would kill investment incentives as well as threaten dividends for the companies in question.
This morning's realisation that none of these measures will come to pass has seen the market rebound like a coiled spring, and a cloud lifted on a number of important UK sectors with the FTSE250 hitting a record high in the process and seen the stocks in question rebound strongly.
National Express, Stagecoach, National Express all higher as the threat of price freezes and rail nationalisation disappears.
Lloyds Banking Group (LONDON:LLOY), Royal Bank of Scotland (LONDON:RBS), Barclays (LONDON:BARC) and HSBC all higher as the bankers bonus tax disappears along with an even bigger increase in the bank levy. A bigger question is whether this vote will change the conversation around HSBC's domicile.
Centrica (LONDON:CNA), SSE (LONDON:SSE) and National Grid (LONDON:NG) all higher as the threat of a break-up of the generation and supply businesses of the 'Big Six' energy companies disappears.
Berkeley Homes, Barratt, Developments in the housing sector have also done well as the threat of rent controls and a mansion tax disappear.
While the initial enthusiasm of the rebound is welcome, given that the FTSE has broadly underperformed its European peers, due to the uncertainty surrounding this year’s poll, investors will soon have to return to the more day to day realities of concerns about the global economy, as well as the prospect of an EU referendum in 2 years’ time.
If any reminder were needed work still needs to be done to address the weaknesses in the UK economy, todays trade data has provided it with a March trade deficit of £2.8bn, while there is the not insignificant matter of the future of the UK, over the next five years.
Once the dust has settled this next parliament is likely to be key in the context of the existence of not only the United Kingdom, given Labour’s wipe-out in Scotland, but also Britain’s place in the EU.
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