By Steve Goldstein, MarketWatch
Home builders and banks among the gainers
Home builders and banks in the U.K. rallied on Friday in relief at a commanding Conservative victory in the general election.
Equity strategists at Citi said the U.K. election result "is probably as good as it gets." While Conservatives had led in polls since the election was called, it wasn't clear beforehand that they would win a majority in Parliament. Read more about the election (link).
The FTSE 250 climbed 3.4% to 21507.50. Investment managers, real estate investment trusts and home builders led the way as investors flocked to stocks more exposed to the domestic economy. Double-digit gainers included lender Virgin Money UK (VMUK.LN), bus operator Stagecoach Group (SGC.LN) and real-estate agent Savills (SVS.LN) .
Goldman Sachs strategists reiterated a call on Friday to go long U.K. domestic stocks, particularly homebuilders and domestic banks. "Clarity on the UK's terms of exit from the EU should unlock pent-up business investment; the reversal of a decade of fiscal consolidation should provide a fillip to domestic demand; and a pick-up in global growth should underpin a recovery in net exports," said analysts Zach Pandl, Sharon Bell and George Cole.
The large-cap FTSE 100 also gained ground, rallying 1.5% to 7382.19.
The surge in the pound was a drag from companies that generate most of their revenue outside the U.K., such as pharmaceutical GlaxoSmithKline (GSK.LN) and beverage maker Diageo (DGE.LN) . However, news that the U.S. and China are on the verge of signing a trade agreement boosted stocks worldwide.
Large-cap advancers included home builders Persimmon (PSN.LN), Taylor Wimpey (TW.LN), Berkeley Group (BKG.LN) and Barratt Developments (BDEV.LN). U.K. banks Royal Bank of Scotland (RBS.LN) and Lloyds Banking Group (LLOY.LN) also surged.
-Steve Goldstein; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
12-13-19 0954ETCopyright (c) 2019 Dow Jones & Company, Inc.