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General election 2019: Pound and housebuilder shares surge

13 Dec 2019

General election 2019: Pound and housebuilder shares surge

The pound and shares have surged after the Conservatives won a clear majority in the UK general election.

Sterling gained 1.9% to $1.34 - its highest level since May last year - on hopes that the big majority would remove uncertainty over Brexit.

The pound also jumped to a three-and-a-half-year high against the euro.

On the stock market, the FTSE 100 share index rose 1.5%, while the FTSE 250 - which includes more UK-focused shares - leapt 4%, hitting record highs.

Prime Minister Boris Johnson said the election result meant that the Conservative government "has been given a powerful new mandate, to get Brexit done".

Mr Johnson has pledged to take the UK out of the European Union by 31 January.

Politically sensitive shares saw sharp rises in morning trading on UK markets.

Shares in water companies such as Severn Trent, which faced the possibility of nationalisation under a Labour government, shot up 6%, while UK housebuilders also saw big gains, with a huge 10% rise for Persimmon.

Shares in banks exposed to the UK economy rose sharply. Barclays, RBS and Lloyds were up 7%, 11% and 6% respectively.

Neil Wilson, chief market analyst at Markets.com, said housebuilders had been undervalued and rose "on hopes that construction will benefit from the Conservative victory".

"We should also consider the potential risk that a Labour government could have posed to their profits being removed," Mr Wilson said.

While many FTSE 100 shares saw big gains, this was offset slightly by the rise in the value of the pound, which affected companies with big international operations. A rise in sterling cuts the value of companies' overseas earnings when they are brought back to the UK and converted back into pounds.

In contrast, the FTSE 250 index - which generally contains firms with more exposure to the domestic economy - jumped more than 5% at one point, before slipping back slightly.

Article & Image Source: BBC News

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