Boris bounce pushes FTSE to biggest one-day rally since 2016
Investors relieved by Tory government and perceived clarity on Brexit
The FTSE 250 leapt yesterday to a new record high amid talk of a “Boris bounce”.
As investors breathed a sigh of relief over the election of Boris Johnson in last week’s general election, the domestically focussed index jumped more than 400 points - almost 2% - to 21,920. That meant its members were worth £7bn more than they were at close of trade on Friday night.
Meanwhile, the FTSE 100 index was on track for its biggest one-day bounce since 2016 and the aftermath of the EU referendum. The blue-chip index was up 2.6%, or 190 points, at 7,543, as investors continued to drive stock prices higher, meaning almost £50bn had been added to the index’s value.
Global heavyweights enjoyed some of the biggest gains, explains Sky News, with British American Tobacco, insurer Prudential and commodities giant Glencore among the biggest risers. Lloyds Banking Group and Barclays also enjoyed strong increases.
Analysts said the Tory election victory, and the clarity they felt it offered on Brexit, was responsible for the buoyancy. “The ‘Boris bounce’ is providing a late turbocharge”, says Richard Hunter, Head of Markets at interactive investor, told The Guardian.
“It’s still the relief playing out,” said Markets.com analyst Neil Wilson.
“It’s absolutely on the mark with what we had expected; there has been a lot of pent-up demand,” Wilson continued. “Uncertainty over Brexit has gone and the Corbyn danger has evaporated.”
According to City AM “a phase one US-China trade deal” also “helped ease long term uncertainties that have consistently weighed on markets”.
Joshua Mahony at IG Group agreed, telling Proactive Investors: “UK markets are surging higher once again today, with positive sentiment over an impending US-China trade deal continued to help drive stocks higher.”
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