UK markets rebound on Johnson election landslide

LONDON (AFP) – A crushing election victory for Britain’s Conservative Prime Minister Boris Johnson sent delight through United Kingdom (UK) markets yesterday, with the pound the prime beneficiary.

London’s FTSE 100 index rallied 0.9 per cent to 7,335.23 points in early morning deals as investors gave their verdict, reversing initial opening losses.

The capital’s second-tier FTSE 250 index meanwhile soared four per cent in value.

“The Conservative Party has secured an historic mandate with a thumping victory, providing clarity for investors where there was confusion,” said analyst Neil Wilson at trading site

Sterling had jumped overnight to hit USD1.3514 – its highest level since mid-2018.

The results of an exit poll are projected onto the outside of Broadcasting House in London, just after voting closed for the 2019 General Election. PHOTO: AP

The euro had tanked to 82.80 pence, which was a low not seen since just after the Brexit referendum in 2016. At around 0820 GMT yesterday, sterling changed hands at USD1.3403, while the euro stood at 83.38 pence.

“Boris Johnson’s mandate should be easier to push through now, and Brexit hopefully will be delivered,” said Accendo Markets analyst Samuel Springett. “This win will deliver more political certainty for markets, which is much needed at the moment.”

Johnson’s governing Conservative Party has swept to a big win, securing 362 seats out of the 650-seat parliament with almost all results declared. That was the biggest Conservative majority since Margaret Thatcher’s heyday in the 1980s, and forced main opposition Labour Party leader Jeremy Corbyn to signal his departure.

Many traders had hoped Johnson would clinch a decisive majority to push through Britain’s exit from the European Union (EU) next month – and dispel political deadlock and uncertainty that has plagued markets since the divisive 2016 referendum.

Johnson’s administration will meanwhile aim to deliver a post-Brexit budget within 100 days.

“For the markets and for business this is the perfect result – a clear majority for the Tories, the Corbyn risk nullified entirely, a major reduction in uncertainty around Brexit and even a quick budget to inject the economy with some added impetus,” added Wilson.

“The only doubts are around the next phase of Brexit – the future relationship – but with a large majority the government will be in a better place to negotiate and do what it needs to do.”

Carolyn Fairbairn, head of the Confederation of British Industry business lobby, congratulated Johnson on the huge win.

“Business urges PM to use strong mandate to rebuild confidence (and) break cycle of uncertainty, starting with reassurance on Brexit,” she said.

The election result was a “historic moment” for a “new contract between business and government to drive new era of inclusive growth”, Fairbairn added.