London close: Stocks surge following elections

London stocks racked up healthy gains on Friday, as investors welcomed news that Prime Minister David Cameron’s Conservative Party would remain in power for a second term.

The FTSE 100 closed up 2.32% at 7,046.82, with banks, utility stocks and housebuilders providing the biggest support.

Lloyds Banking Group, Royal Bank of Scotland and Barclays ended sharply higher as the threat of Labour’s planned policies on the sector dissipated. Labour had threatened to break up the banks and potentially hit them with a one-off bonus tax and a higher bank levy.

Shares in utilities Centrica and SSE also ended in the black as the risk of energy price caps by Labour fell away.

Housebuilders enjoyed a solid performance, with Barratt Developments, Persimmon and Taylor Wimpey all closing up as the Tory election victory removed the threat of rent caps and the controversial Mansion Tax.

The Tories won 330 out of a possible 650 seats in Parliament – four more than the 326 required for an overall majority.

Their victory means investors have avoided the complications of a hung parliament – the outcome recent opinion polls suggested was most likely – which could have resulted in weeks of political uncertainty as either party grappled to form a coalition.

“Stocks will typically jump after a Tory election win, the reason stocks jumped so much is that a majority government is perceived to reduce uncertainty and because a majority simply wasn’t expected,” said Jasper Lawler, market analyst at CMC Markets. “The quick removal of uncertainty presented by a hung parliament, in effect beat expectations.”

“Markets breathed a sigh of relief at the continuity of a Conservative government and the reduced threat of the Scottish National Party destabilising the union through a coalition with the Labour party,” he added.

With the election results taking centre stage, the release of US nonfarm payroll figures came and went with little fuss.

Data showed employers added 223,000 jobs in April compared with a consensus forecast for an increase of 220,000, while the unemployment rate was bang in line with estimates, falling to 5.4% last month from 5.5% in March.

InterContinental Hotels Group gained as it said first-quarter revenues per available room, the key metric for the industry, were up 5.9% in comparable terms.

Shares in British engineering firm Rolls Royce also ended the day on a positive note, as the company maintained its full-year guidance for 2015, although it warned that revenue could take a £350m hit as a result of unfavourable currency rates.

BG Group said that its core earnings fell a staggering 41% in the first quarter compared to the same period a year earlier, weighed by depressed oil and gas prices.

Shares in Man Group reversed earlier gains to end lower as investors digested the company’s first-quarter results, which showed a 7% increase in funds under management.

Market Movers
techMARK 3,269.17 +2.29%
FTSE 100 7,046.82 +2.32%
FTSE 250 17,935.93 +2.80%

FTSE 100 - Risers
Babcock International Group (BAB) 1,083.00p +9.39%
Centrica (CNA) 278.20p +8.08%
St James's Place (STJ) 962.50p +7.24%
Barratt Developments (BDEV) 549.50p +7.12%
Capita (CPI) 1,238.00p +6.72%
London Stock Exchange Group (LSE) 2,553.00p +6.11%
Royal Bank of Scotland Group (RBS) 352.40p +6.11%
Taylor Wimpey (TW.) 175.70p +5.84%
Lloyds Banking Group (LLOY) 86.85p +5.75%
Persimmon (PSN) 1,746.00p +5.63%

FTSE 100 - Fallers
Glencore (GLEN) 302.60p -0.25%
Randgold Resources Ltd. (RRS) 4,764.00p -0.23%

FTSE 250 - Risers
Ladbrokes (LAD) 116.10p +9.94%
Berkeley Group Holdings (The) (BKG) 2,737.00p +9.88%
Savills (SVS) 911.00p +9.36%
Laird (LRD) 389.90p +9.15%
Zoopla Property Group (WI) (ZPLA) 232.00p +7.81%
NMC Health (NMC) 817.00p +7.36%
Euromoney Institutional Investor (ERM) 1,261.00p +6.77%
TR Property Inv Trust (TRY) 314.90p +6.67%
Stagecoach Group (SGC) 398.30p +6.61%
Interserve (IRV) 616.50p +6.38%

FTSE 250 - Fallers
Just Eat (JE.) 436.70p -11.97%
Acacia Mining (ACA) 286.70p -2.15%
Lonmin (LMI) 142.00p -1.05%
Amec Foster Wheeler (AMFW) 885.50p -0.95%
TalkTalk Telecom Group (TALK) 369.60p -0.83%
Man Group (EMG) 177.70p -0.73%
Infinis Energy (INFI) 188.00p -0.53%
Evraz (EVR) 201.70p -0.30%
AL Noor Hospitals Group (ANH) 865.00p -0.12%