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General Election: FTSE 100 Winners and Losers

The FTSE 100 is up in mid-morning trading following the shock General Election result. Leading the rally are miners and international banks

Karen Kwok 9 June, 2017 | 11:05AM

The FTSE 100 up 1% at 7,510 following the shock election result, where no political party secured a majority. The FTSE 250, a domestically-focused index, is down 0.3% to 19,693.

Yesterday’s General Election ended in a hung parliament as the Conservative Party failed to win a majority. The Conservatives have won 318 seats, the Labour party has 261 seats. To have a majority rule in House of Commons, a political party needs to take 326 of 650 seats. May is expected to form a Government with Northern Ireland’s Democratic Union Party.

Sterling has fallen 2% overnight against the dollar; the weaker pound has a positive impact on FTSE 100, because of the international nature of the FTSE’s revenues.

“We expect continued uncertainty to keep the pound under pressure. The UK is still running a significant current account deficit and uncertainty could also weigh on household spending and business investment. At this early stage, the balance of factors looks less supportive for domestic UK equities. In contrast, large cap UK equities, with earnings overseas, should continue to benefit from the currency boost to earnings provided by a weaker pound,” said Nancy Curtin, chief investment officer at Close Brothers Asset Management.

Winners: Miners, Utilities, and Global Banks

Miners Fresnillo (FRES) and Randgold Resources (RRS) are up 4.3% and 2.7% in mid-morning trading, leading the rally of the FTSE 100. International banks also enjoyed gains, as Standard Chartered (STAN) and HSBC (HSBA) were up 2.4% and 1.6% respectively. Shares of international luxury brand Burberry (BRBY) are up 2.2%, while utilities stock Centrica (CNA) was up 1.3%.

Losers: Housebuilders and UK Banks

UK-focused bank Royal Bank of Scotland (RBS) was the biggest faller with a 3.9% loss by 11am. Housebuilders Persimmon (PSN), Taylor Wimpey (TW.) and  Barratt Developments (BDEV) all fell more than 3%.

Retailers Marks & Spencer (MKS) and Next (NXT) were both down 2.9% while Lloyds (LLOY) fell 2%. ITV (ITV) and SKY (SKY) are down 1.8% and 2.4% respectively.

“I expect selling today, with falls of 2 to 3% in sectors like property, media, retailers and challenger banks,” said Colin McLean, managing director of SVM Asset Management.

“However, FTSE 100 sectors with international earnings – pharma, oils, mining, and exporters – should gain on the weaker Pound.”

Miton’s David Jane believes this offers an opportunity, saying, “With recent slower mortgage approvals and the election have caused share prices of housebuilders to weaken short term, the currently low mortgage rates and wider availability of high loan to value offers mean the background for housebuilders remains favourable.”

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article
Security NamePriceChange (%)Morningstar
Rating
Barratt Developments PLC692.00 GBX0.36-
Burberry Group PLC1,893.00 GBX-0.37
Centrica PLC172.00 GBX-0.41
Fresnillo PLC1,418.00 GBX1.21-
HSBC Holdings PLC742.90 GBX-0.72
ITV PLC176.40 GBX-1.29-
Lloyds Banking Group PLC66.99 GBX0.24
Marks & Spencer Group PLC346.70 GBX-1.06-
Next PLC4,898.00 GBX-1.17-
Persimmon PLC2,833.00 GBX-0.25-
Randgold Resources Ltd7,490.00 GBX1.77-
Royal Bank of Scotland Group (The) PLC280.10 GBX0.32
Sky PLC940.00 GBX0.05
Standard Chartered PLC748.70 GBX-1.03
Taylor Wimpey PLC203.40 GBX-0.49-
About Author Karen Kwok

Karen Kwok  is a Reporter for Morningstar.co.uk