Babcock suffers at the prospect of paralysis in the Government

BABCOCK bore the brunt of the election upset as analysts warned the outcome raised the chances of a slowdown in new orders at the engineer.

The FTSE 100 stock plunged to a seven-week low of 873p in intraday trade after broker Stifel downgraded its rating to “hold”, citing “a decidedly more uncertain political climate”. The broker believes having in effect a coalition government will “inevitably” delay initiatives and bidding processes at all levels of government. Analyst Caroline La Soujeole said: “The main driver of the share price is order flow but we expect a prolonged hiatus across the Government and civil service to impact this.” Shares closed down 26.5p, or 2.9pc, at 882.5p.

Taylor Wimpey was the biggest election casualty, down 6p at 177.5p, on fears the result will weigh on the UK’S economic outlook. Its peer, Barratt Development, lost 13.5p to 576.5p,

Persimmon fell 32p to £23.79, and Crest Nicholson dropped 31.5p to 579p. However, Anthony Codling, of Jefferies, said: “Share prices overreacted follow the UK’S EU referendum and we would buy UK housebuilders on weakness today, next week and the week after that.”

Royal Bank of Scotland also recoiled, down 6.3p to 250.9p, as analysts warned the election outcome was “bad news” for banks. Bernstein cautioned: “It will be a weak government leading UK into Brexit negotiations – the single biggest tail risk for the economy and that can’t be good news for the banks.”

Lloyds fell 0.7p to 70p.

Retailers Marks & Spencers and Next fell 6.6p to 360.1p and 76p to £42.76 respectively, amid fears heightened political uncertainty would translate to weaker consumer confidence. Leisure stocks also suffered from a postelection hangover, as Greene King slipped 9.5p to 711.5p and JD Wetherspoons lost 31p to 969p.

Elsewhere, fears the new Government could delay a regulatory review of the gaming industry hurt bookmakers. William Hill fell 7.1p at 277.9p and

Ladbrokes shed 2.4p to 115.8p.

On the wider market, the blue-chip index charged higher, buoyed by pound weakness. With 60pc of FTSE 100 revenues coming from outside the UK, a weaker pound supports export-oriented companies.

Unilever climbed 59.5p to £43.29, Reckitt

Benckiser rose 102p to £79.54 and Rolls-royce accelerated 20.5p to 908.5p. The FTSE 100 closed 77.35 points, or 1.04pc, higher at 7,527.33.

Energy provider SSE was also among the risers, up 3p to £14.95, as analysts speculated that the energy price cap in the Conservative manifesto might not materialise.

Elsewhere, investors cheered as Sports Direct confirmed its pound-dollar exchange rate is “fully hedged” for this year. Shares nudged up 3.8p to 290.4p.

Away from electioninduced moves, Deutsche Bank lowered BT’S price target to 265p, sending shares 6.5p lower to 294.8p. Analysts urged investors to sell into “any share price strength” and rotate into less risky telecom stocks.

Finally, Kaz Minerals bounced 32.8p to 532.5p after it extended its loan facility, while Gem

Diamonds added 3.5p to 91.5p as RBC upped its rating to “sector perform”.