UNITED KINGDOM – Shares in the United Kingdom surged up while the pound enjoyed new highs in the wake of the country’s general elections. Global shares also went up over reports of a partial trade deal between China and the US reached investors.
Prime Minister Boris Johnson and the Conservatives’ resounding victory in the just concluded elections saw the UK stock market and the pound sterling relishing a boost.
The sterling went up by 1.9% to $1.34. It’s the highest the currency has been since May 2018. The pound also hit a new high against the euro. It’s a win it hasn’t enjoyed in three and a half years.
Meanwhile, shares in the FTSE 100 jumped 1.5% while the FTSE 200 increased by 4%. It’s a record high for the UK-centric index.
Stocks in several politically sensitive companies rose sharply this morning. Shares in the water company Severn Trent surged up by 6%. The company was facing nationalization if the Labour party pulled off a win. The country’s contractors and home builders also enjoyed major gains, although some analysts noted that this sector was undervalued.
Bank shares also experienced a boost. Barclays and Lloyds went up by 7% and 6% respectively. Meanwhile, RBS was a big winner as its stocks rose by 11%.
The notion of an orderly Brexit appears to have encouraged investors around the world. Ireland’s ISEQ index went up by 3%. Dublin’s stock exchange is usually considered a good gauge of Brexit sentiment. Shares in the Bank of Ireland went up by more than 9% while the AIB rose 7%.
News of an initial “phase one” deal between the United State and China also contributed to the global market’s upbeat mood.
Stocks in Asia had a good run as the week drew to a close. The Nikkei 225 rose by 2.4% while the Hang Seng Index jumped 2.1%. It might be the biggest increase the HSI had in over two months. The KOSPI and the Shanghai Composite Index also advanced by 1.3% and 1.2% respectively.
US stock futures also improved during the day The Dow Jones went up 5% or 129 points to 28,257. Meanwhile, the S&P 500 gained 0.4% or 12.75 points to 3,180.75.
The deal’s initial phase hasn’t been announced formally yet but US President Donald Trump reportedly signed off on it already. It will likely put off the round of tariffs set to be levied on Chinese products while also reducing rates on the farm goods China is purchasing.