Britain’s leading companies have seen their stock market valuation rise by almost £50bn after the post-election rally in share prices gathered pace.
In a second day of hefty gains, the FTSE 100 index shrugged off evidence that the economy was struggling in the run up to polling day and closed 165 points higher at 7,519.05.
At one stage the FTSE 100 was up by 190 points but still posted its biggest one-day gain since the week following the EU referendum in June 2016. By the close of trading in London, the index was up by 2.25% – adding nearly £42bn to share values.
The FTSE 250 – which charts the performance of the next 250 biggest quoted companies – finished up 412 points at 21,920. The 1.92% jump added £7.5bn to valuations.
Shares in the City’s leading quoted prices have risen since the election despite the strengthening of sterling, which depresses the value of profits made by the large number of FTSE 100 companies that do business outside the UK.
The stock market has been boosted by a combination of factors – the prospect of an end to Brexit uncertainty, the removal of the threat of re-nationalisation following Labour’s defeat, and hopes that the interim trade deal between the US and China signals a rolling back of protectionism.
London’s strong performance was part of a global trend that saw all three of Wall Street’s major share price indices lifted to record highs amid optimism of stronger, faster growth. Chinese share prices hit a six-week high and oil prices also rallied.
Adding to the upbeat mood were weekend remarks by US trade representative Robert Lighthizer, who said an interim trade deal was “totally done” and that it is expected to nearly double US exports to China over the next two years.
Some investors cautioned against overconfidence. “It’s good news but we can’t celebrate yet,” said Mark Mobius, founding partner of Mobius Capital Partners and former executive chairman of the Templeton Emerging Markets Group. “This agreement is dependent on the degree to which the Chinese comply,” Mobius said.
