Investors cash in on Boris bounce as FTSE 250 surges

● Housebuilding, utility and bank shares lead risers after Tories’ election triumph

Stock markets reacted positively to the Conservatives’ election victory with the FTSE 250 index in particular racking up sharp gains.

The mid-cap FTSE 250, which includes more in the way of Uk-focused shares, touched an all-time high, leaping 3.4 per cent to close at 21,507.8.

The benchmark FTSE 100, which contains more international-focused stocks that will be affected by strong gains in sterling, still managed to rise 1.1 per cent to 7,353.4.

Emma Wall, an analyst at investment group Hargreaves Lansdown, said: “Banks, property and utilities are benefiting from the Boris bounce. As expected, it’s the domestically focused stocks that have done well.

“UK banks Barclays, Lloyds and Royal Bank of Scotland have jumped – shrugging off that Moody’s downgrade of last week.”

Russ Mould, investment director at AJ Bell, said: “The Conservative majority win at the general election has driven a rally in the pound and UK domestic stocks.

“It removes the threat of Labour trying to renationalise many sectors, explaining why shares in Royal Mail jumped.

“The fact that there also won’t be a hung parliament has given support to equities. The market now has more confidence that Johnson should be able to pass a Brexit deal and for the UK to formally leave the EU at the end of January 2020.

“All these factors helped the FTSE 250 to trade higher, triggering the starting gun for investors to start looking at UK equities again.”

Housebuilders made solid progress, with Barratt Developments and Taylor Wimpey notching up double-digit gains.

Nick Burchett, co-fund manager at Cavendish Asset Management, said: “Less of the oven-ready, and more of the shovel-ready for housebuilders following the Tory victory.

“No sector has been weighed down more by Brexit uncertainty in recent times. Tax incentives, such as the 30 per cent discount for first-time buyers, is likely to get transactions moving imminently and demand for construction labour will also increase.

“Projects that have been put on the back burner since 2016 can now go full steam ahead.”

Rupert Thompson, head of research at wealth management group Kingswood, said: “The big question now is whether this relief rally in UK assets has further to run.

“There is also considerable uncertainty over the scope of any trade deal with the EU. Trade deals generally take years, rather than months, to negotiate.

“Any further gains in UK assets will be more down to cheap valuations rather than a radical transformation of economic prospects.”

Adam Vettese, an analyst at investment platform etoro, noted: “This is the result that the markets had been crying out for as it alleviates some of the uncertainty that has been lingering.”