- Blue-chip index sent lower
- Labour claims thorough victory
- Goldman upgrades UK growth prospects
3.56pm: Stock to close on low note
Despite trading in the green for most of this post-election day, the FTSE 100 blue-chip index looks set to end of a bum note, having dipped up to 90 points from intraday highs.
Much of the blame goes to US-exposed banking stocks, primarily Barclays PLC (LSE:BARC) and HSBC plc, both of which plummeted when US markets opened in the red this afternoon.
Housebuilders will end the week on a strong note though, with big-cap builders Persimmon, Vistry, Barratt and Taylor Wimpey chalking up strong post-election gains.
Starmer's decisive victory has raised hopes of a housebuilding spree; a key policy for the incoming cabinet.
As the week wraps up, the FTSE 100 was trading 44 points lower at 8,196.
3.15pm: FTSE 100 plummets 100
The FTSE 100 has taken a dive in the closing hours of the week, with the blue-chip index falling nearly 100 point from its intraday high.
It comes amid the US stock market’s mixed bag of an opening, with tech stocks rallying but the Dow Jones Industrial Average plummeting up to 140 points.
US-exposed UK Banking stocks have dragged the FTSE 100 lower, with Barclays PLC (LSE:BARC) and HSBC plc shedding more than 2% each.
Prudential plc and Standard Chartered PLC (LSE:STAN) are also dragging the market lower.
In contrast, UK housebuilders remain bullish, with Vistry, Barratt, Persimmon and Taylor Wimpey all up more than 2% apiece.
At the time od writing, the FTSE 100 was trading at 8,190.
2.56pm: Goldman Sachs upgrades UK growth prospects
US banking giant Goldman Sachs has upgraded its forecast on the UK economy following Labours decisive victory against the Conservative Party.
Raising its gross domestic product forecasts to 1.6% and 1.5% for 2025 and 2026 (a 0.1% bump respectively), Goldman analysts said Labour’s agenda should provide a “modest boost to demand growth in the near term”.
“Reforms to the planning system could boost housebuilding and productivity; higher public sector investment could lift potential output; and closer trade ties with the EU could mitigate some of the costs of Brexit,” said analysts.
Goldman did warn that potential tax rises “could affect incentives to invest and Labour’s pledge to reduce net migration could weigh on labour supply”.
The election result spurred housebuilding stocks higher on Friday, with Persimmon PLC (LSE:PSN), Taylor Wimpey PLC (LSE:TW.) and Vistry Group PLC (LSE:VTY) among the biggest risers in the FTSE 100.
2.16pm: Crest Nicholson rallies on revised takeover bid
FTSE 250-listed Crest Nicholson PLC (LSE:CRST) shot up 5.5%, making a top riser in the mid-cap space.
It comes as the housebuilder weighs up a rival takeover bid from Avant Homes, which is headed by former Persimmon alumni Jeff Fairburn.
Sky News reports that Elliott Advisors-owned Avant has upped its bid after having a £665 million takeover offer rejected last month.
The revised offer amount has not been disclosed.
There is a good chance that Crest Nicholson would have made gains today regardless; housebuilders have roundly rallied following Labour’s comprehensive thrashing of the Tories at the polls.
Labour has pledged to build 1.5 million homes during its first term, causing the likes of Persimmon, Taylor Wimpey and Vistry to shoot to the top of the FTSE 100 risers table.
Crest Nicholson shares are currently swapping for 259.54p.
1.36pm: US stocks go volatile
Futures contracts have the Nasdaq 100 shooting up 64 points when hungover US traders spur into action this Friday.
The Dow Jones Industrial Average and the broader S&P 500, meanwhile, are showing heightened volatility but have the potential to add points too.
US employment data show released this morning showed a slightly higher-than-anticipated unemployment rate of 4.1% in June, edging out prior expectations of a flat 4%.
Average hourly earnings rose 3.9%, undershooting the 4.1% predicted by the market.
These macroeconomic results are unlikely to significantly impact US stock prices.
1.17pm: Bitcoin slumps to four-month low
Bitcoin remains in the outtray this week, with the world’s largest cryptocurrency slumping another 3% to bring week-on-week performance to a bruising -10%.
The bitcoin market’s bearish turn comes as bitcoin funds tied up for over a decade in the Mt Gox administration estate begin to flood the market.
Trustees of the collapsed former bitcoin exchange are beginning the multibillion-dollar customer reimbursement scheme, with fears of heightened selling pressure to follow.
Arkham Intelligence flagged an on-chain transaction from a cold storage wallet owned by Mt Gox to a new wallet, suggesting the transfer of funds is underway.
BREAKING
Mt Gox moves 47,228 BTC ($2.71 billion dollars) from cold storage to a new wallet. pic.twitter.com/3ZdSlC1IX2
— Arkham (@ArkhamIntel) July 5, 2024
While there is no telling what the fundamental impact these distributions will have, crypto traders, who are well known for their knee-jerk reactions, appear to be taking a negative view.
The dip in bitcoin’s price has led to considerable long liquidations on the options markets. Over $300 million in long positions was wiped from the market today, following on from yesterday’s $416 million gutting and Wednesday’s $185 million wipeout.
At the time of writing, bitcoin was swapping for $55,363 with a market capitalisation of $1.09 trillion.
Back to the UK stock market, the FTSE 100 is holding steady at 8,243, slightly less than three points higher from yesterday’s close.
12.50pm: France’s Macron wants bilateral cooperation on climate and AI
French president Emmanuel Macron has congratulated Keir Starmer on his thumping victory over The Conservatives in the UK election.
The pair appear to have exchanged words, with Macron Tweeted that he was “pleased with our first discussion”.
“We will continue the work begun with the UK for our bilateral cooperation, for peace and security in Europe, for the climate and for AI,” wrote Macron.
Congratulations Sir @Keir_Starmer on your victory. Pleased with our first discussion.
We will continue the work begun with the UK for our bilateral cooperation, for peace and security in Europe, for the climate and for AI.
— Emmanuel Macron (@EmmanuelMacron) July 5, 2024
Whether the pair has any chance of working together, though, is in doubt.
France heads to the polling stations this Sunday to vote on its leader, without right-wing challenger Marine Le Pen’s National Rally eyeing a victory.
Most analysts see it as a tight race and one that, like the UK elections, is being seen as a referendum on the incumbent’s leadership.
Back in London, the FTSE 100 has erased most of its morning gains and is currently less than one point higher at 8,242.
12.05pm: Blue chips fall back
The FTSE 100 has fallen back from intraday highs of 8,278 to 8,247 at the time of writing.
It marks a stable, muted reaction to Labour’s landslide election victory, suggesting the Conservatives’ brutal defeat was already baked into the markets.
The prospect of stability could boost company valuations in the long run, according to Emily Barnard, deputy portfolio manager of the Edinburgh Investment Trust (LSE:EDIN).
“While there is usually a gap of varying widths between what a political party promises in a manifesto and what it can deliver in government, the Labour victory should see a meaningful reduction in the political uncertainty risk premium which has been attached to UK assets for a number of years,” she said.
The more domestically minded FTSE 250 set continues to outperform the blue-chip index, adding 225 points – or 1.1% – this morning.
11.52am: SNP down 38 seats
The Scottish National Party (SNP) has lost 38 seats in the general election so far, with one seat still to declare due to a recount.
Labour has made dramatic gains across the central belt, with most results showing a 20% vote swing from the SNP.
The Scottish Conservatives won five seats, down from six in 2019, but leader Douglas Ross failed to secure the Aberdeenshire North and Moray East seat.
First Minister of the SNP John Swinney called the result "very, very difficult and damaging".
"The Scottish National Party needs to be healed and it needs to heal its relationship with the people of Scotland, and I am absolutely committed to doing that," Swinney said.
A recount in Inverness, Skye, and West Ross-shire has been delayed due to a statistical discrepancy between verified and counted votes. The seat has seen a close contest between the SNP and the Scottish Liberal Democrats.
Labour has taken all six seats from the SNP in Glasgow.
11.20am: Disney heir wants Biden begone
How would Keir Starmer handle a Trump presidency?
The prospect of the ‘special relationship’ comprising different (if not entirely opposite) ends of the political spectrum is greater than ever following President Joe Biden’s car crash debate performance last week.
Biden is now facing intense pressure to step aside and let someone else face Trump in the November election, not least from one of the Democrat Party’s biggest donors.
Abigail Disney, heiress to the throne of the Mouse House, told CNBC on Thursday that she’ll be withholding party donations until Biden steps aside.
“I intend to stop any contributions to the party unless and until they replace Biden at the top of the ticket,” she said.
“This is realism, not disrespect. Biden is a good man and has served his country admirably, but the stakes are far too high.
“If Biden does not step down the Democrats will lose. Of that I am absolutely certain. The consequences for the loss will be genuinely dire.”
However, whether a change of leadership is enough to secure a Democrat victory is unclear.
Starmer does not have a history of criticising Trump and recently lambasted Tottenham’s Labour MP David Lammy’s description of Trump as a “woman-hating neo-Nazi sympathising sociopath”.
“The relationship between the UK and the US is strong, it’s historic and obviously it’s above the individuals who are in office,” Starmer told BBC Radio 5 Live.
As for Trump, whether due to apathy or ambivalence, he is not on record saying anything about his potential transatlantic counterpart.
10.50am: Trainline steams higher, but for how long?
Online ticketing platform Trainline PLC (LSE:TRN) is up 3%, making it a top mover among the bullish FTSE 250 set today.
The rally comes after the company, which aggregates and sells cheap train fares across the UK and Europe, conducted a share repurchase scheme of 130,265 shares at 333.68p, or around £435,000.
But whether Trainline can sustain momentum under a Labour administration is another story.
As eToro’s Mark Crouch put it: “With talk of nationalisation of the railways being bounded around by Labour for some time, companies like First Group and Trainline may be somewhat apprehensive about Labour being in power.”
Labour has committed to fully nationalise the train network within five years of coming to power.
For now, Trainline shares remain buoyant at 343.2p.
10.01am: FTSE 250 pulls ahead
While the post-election reaction among the FTSE 100 set has been rather muted, the mid-cap FTSE 250 index has made strong gains.
The index, which comprises the 101st to 350th largest UK-listed companies by market capitalisation, has added over 250 points, or around 1.2%, to hit 20,861.
Not a year-to-date high, but only 40 points off.
Unlike the globally focused FTSE 100, the FTSE 250 is substantially more domestic in terms of revenue generation, making it more exposed to any immediate political ramifications emerging from the changing of the guard.
“Labour talked a lot about wanting to boost the economy and help businesses during its election campaign,” minted AJ Bell investment analyst Dan Coastsworth.
“Now comes the hard part and delivering on its promises. Public finances aren’t in the best shape given high levels of debt and it will take a lot of hard work to accelerate economic growth.
“For now, Labour has a period of grace to settle into office and fine-tune its strategy, but investors can be impatient at the best of times and failure to produce positive results as we move into 2025 could see sentiment start to shift.”
9.41am: Housebuilders on top
UK housebuilders are swooning over Labour’s comprehensive trouncing of the incumbent Conservatives.
In fact, housebuilders currently comprise four of the five top FTSE 100 risers, with Persimmon PLC (LSE:PSN) leading the charge by gaining more than 4%.
Vistry Group PLC (LSE:VTY), Barratt Developments PLC (LSE:BDEV) and Taylor Wimpey are also rallying on optimism about the new government's plan to provide 1.5 million new homes throughout the next parliament.
Aruna Karunathilake, portfolio manager at fund manager Fidelity said this morning: "That should alleviate builders’ concerns about planning bottlenecks impeding growth in the medium term.
"We have been confident for some time about the attractive long-term prospects for companies exposed to the housing sector because build rates need to rise to address Britain’s growing housing deficit."
The FTSE 100 blue-chip index is currently 17 points higher at 8,258.
9.18am: Bond prices improve (a smidge)
Yields on the UK 10-year gilt fell slightly this morning, suggesting a touch of post-election confidence in the bond market.
Currently sitting at 4.175%, it was hardly a dramatic improvement from yesterday’s close at 4.2%, indicating that, as with the relatively muted performance in the equity markets, Labour’s thumping victory was already priced in.
Neil Wilson, chief market analyst at Finalto, called the improvement “part of a broader move with German bund yields also down a bit this morning”.
He added that “we are seeing very muted reactions in FX markets as a Labour win was a) well priced and b) not scary for the markets – at least not yet”.
In the blue-chip space, the FTSE 100 has come off slightly from morning highs to sit at 8,261 at the time of writing; roughly 20 points higher from Thursday’s close.
8.55am: The morning so far
There was an election, by the looks of it. And not just any election, but one that has seen Keir Starmer lead the Labour Party into power after 14 years of Conservative rule.
Votes are still being counted, but Labour has already secured a huge majority having already won more than 200 seats.
The general consensus is the election was more of a referendum on Tory rule than a vote of confidence in Labour, but markets remain steady nonetheless.
The FTSE 100 added 30 points to 8,272 in the opening hour, with the election results likely already priced into the market.
Victoria Scholar, head of investment and interactive investor said: “The relaxed mood across financial markets reflects the fact that Labour’s landslide win had long been predicted by the polls and therefore was already baked into market prices.
“Starmer tried to appeal to the markets during his election campaign by positioning Labour as a pro-business party and refraining from announcing plans for major tax increases.
In stark contrast to Liz Truss’ ill-fated mini Budget in 2022 which sent bonds and the pound tumbling, today’s lack of market volatility and subdued price action suggests investors and traders see the latest election outcome as a democratic vote in favour of a new political era representing stability and calm.
Outside of the election news, house prices fell 0.2% in June, according to the Halifax House Price Index, though this was not enough to drag housebuilding stocks lower.
In fact, Persimmon PLC (LSE:PSN), Vestry Group plc, Barratt Developments PLC (LSE:BDEV) and Taylor Wimpey PLC (LSE:TW.) were among the morning’s strongest performers, with Fresnillo PLC (LSE:FRES), easyJet plc and Glencore PLC (LSE:GLEN) also making gains.
8.39am: Shell to take billion-dollar hit from Rotterdam biofuel site
Shell PLC (LSE:SHEL, NYSE:SHEL) is expected to write down up to $1 billion in impairment charges after pausing construction of its 820-000-tonne-per-year biofuels facility in Rotterdam, the Netherlands.
Shell announced the on-site pause earlier this week, stating that it would undertake an impairment review of the plant.
“Temporarily pausing on-site construction now will allow us to assess the most commercial way forward for the project,” said Huibert Vigeveno, Shell’s downstream, renewables and energy solutions director.
Shell began work on the plant in 2021, but plans fell to the wayside as the oil supermajor reassessed its commitment to green energy plans.
In a second-quarter trading update published today, Shell said it expects non-cash post-tax impairments of up to $2 billion, with up to $1 billion arising from pausing on-site construction of its Rotterdam HEFA (Hydroprocessed Esters and Fatty Acids) facility.
Up to $800 million worth of impairments will also come from Shell’s Singapore-based chemicals & products segment.
8.21am: FTSE 100 sent higher
The blue-chip index is in high post-election spirits, adding 31 points to 8,272 in opening trades.
Housebuilders are leading the charge, with Barratt Developments PLC (LSE:BDEV), Vestry Group plc, Persimmon PLC (LSE:PSN) and Taylor Wimpey PLC (LSE:TW.) among the top risers.
This comes despite house prices falling in June, as detailed below.
8.13am: House prices fall in June
House prices fell by 0.2% in June according to the Halifax House Price Index, marking a £476 decrease in the average house price, which now stands at £288,455.
Over the past year, prices have risen by 1.6%, with a modest increase of 0.4% since the beginning of 2024.
Regional variations were notable, with the North West experiencing the strongest growth in England at 3.8%, while prices in Eastern England saw a decline of 0.9%.
Commenting on the figures, Hargreaves Lansdown’s head of personal finance Sarah Coles said: “The property market is likely to be near the top of the government’s agenda in the coming weeks - and not just the removal van at Number 10.
“However, it isn’t going to make much of a difference in the short-term. House prices and sales have been tepid for most of 2024 so far, and they don’t look likely to warm up any time soon.
“The market is suffering from a dearth of demand, as higher mortgage rates and sky-high house prices have priced so many buyers out of purchases.”
Coles suggested that lower mortgage rates “may hold the key to renewed buyer enthusiasm”.
7.41am: Change ‘begins now’, but maybe not for markets
Starmer has rallied the crowd at the Royal Festival Hall, stating that change “begins now” in an “age of national renewal”.
Labour will “start to rebuild our country” he claimed, as the party scooped up hundreds of seats in a bloody defeat for the Tories.
Yet markets, apolitical as they often are, are unlikely to be immediately impacted by the changing of the guard.
Futures contracts for the FTSE 100 blue chip index point to 26 points of gains when markets open this Friday and while the pound spiked against the euro and US dollar, the gains were incremental as best.
Attention will be on the 10-yield gilt yield as the day progresses.
“Labour’s policies should be neutral for the UK’s long-term economic growth,” said Daniele Antonucci, chief investment officer at Quintet Private Bank, though he warned of possible ramifications for inflation.
“In general, in the near term, we’d expect somewhat firmer support for consumer spending. Taken at face value, this would imply modest upside pressure on wage growth and, therefore, inflation,” he said.
“Labour’s pledge to introduce a ‘genuine living wage’ potentially points to further hikes in the National Living Wage, but the magnitude remains quite uncertain.”
7.27am: Pound higher in post-election boost
The pound gained against the US dollar and euro in today’s Asia trading window in a post-election boost.
Markets appeared bolstered by the prospect of stability with a clear Labour majority following a tumultuous period of leadership by the ousted Tories.
In total, Labour has won 212 seats so far while the Conservatives have lost 245, putting Starmer’s party on track for a robust majority.
Nigel Farage’s Reform party has claimed four seats, including Farage himself, while Ed Davey’s party has returned 68 MPs so far.
Vote counting remains ongoing.
7.10am: Labour swoops to victory
The FTSE 100 is tipped to open 23 points higher when markets open today, according to futures contracts for the blue-chip index.
It comes as Labour, as widely expected, claimed a thorough victory in the election, putting the party into power after 14 years of Tory rule.
It was a major loss for the Conservatives, with senior members including Liz Truss, Penny Mordaunt and Jacob Rees-Mogg losing their seats, while former Labour leader Jeremy Corbyn was voted in as member for Islington North as an independent.
Company news is few and far between today, with macroeconomic news consisting of the Halifax House Price Index in the UK, retail sales in the EU and US employment data later in the day.