With the UK announcing Rishi Sunak as this month’s Prime Minister, gilts saw a positive correction, Sterling dipped slightly against the US dollar, and major banking shares rallied.
Read on for a brief overview of how the markets responded to Rishi.
Stock Market
Despite tapering off slightly in the past few moments, the FTSE 250 remains in a strong position at 7015.
The index did reach session highs of 7046 before cooling off, but still remains 0.15% higher day on day.
The FTSE 100 saw bullish anticipation in today’s session – Source: capital.com
Pearson PLC (LSE:PSON) remains the top mover in today’s session, after the education and publishing company said it was on track to deliver its full-year sales and profit guidance in the latest trading update.
On the commodities front, natural gas rallied 5.5% and is likely to remain bullish until the closing bell rings.
Banks
Most major banks have rallied on the markets following Rishi Sunak’s successful bid for the premiership.
Lloyds Banking Group PLC (LSE:LLOY) is now up 3.4% to 42.6p, while Barclays PLC (LSE:BARC) is up 3.9% to 150p.
NatWest Group PLC (LSE:NWG) acted similarly and is currently changing hands at 241p.
HSBC Holdings PLC (LSE:HSBA) also saw gains, though remains 1% down against the day at 473p.
Forex
Sterling has fallen against the US Dollar, with the GBP/USD pair dropping 0.4% to US$1.128 on the one-hour chart.
GBP/USD takes a dip following Sunak’s appointment as the next UK Prime Minister – Source: capital.com
The euro is also surging against the pound, adding over 50 pips in the past two hours to bring the EUR/GBP pair up to 87.4p.
The Swiss franc and Japanese yen gained against the pound, though both remain down against the day.
Gilts
UK 10-year gilts fell sharply on the announcement, with rates now at 3.81%, representing a nearly 6% fall day on day to the lowest point in over a month.
Chris Beauchamp, senior market analyst at IG Group, welcomed a swift end to the leadership race: “The news of Rishi Sunak's successful bid to become the new prime minister has spared markets any additional uncertainty today, with the UK essentially set to be steered through this crisis by two chancellors.”
“Gilt markets have certainly responded positively, with falling yields bringing hope that we will see borrowing costs continue to ease after a turbulent Truss tenure.“