|Day's Range||7,223.42 - 7,429.04|
|52 Week Range||6,536.50 - 7,727.50|
(Bloomberg) -- The rally inspired by the U.K. Conservative Party’s election victory has come too late for Neil Woodford, whose former flagship fund is being liquidated just as his bets on small and mid-sized U.K. firms start to pay off.Stocks that were the biggest holdings in the LF Woodford Equity Income Fund rose as much as 15.8% on Friday after Prime Minister Boris Johnson’s party roused the markets with an historic win.Analysts predict a surge in international investment in U.K. markets now that Johnson has the majority he needs to push his Brexit deal through Parliament. The pound rose as much as 2.7% against the dollar while the FTSE 250 Index, which includes many of Woodford’s picks, posted the biggest rise in more than nine years.The problem is that Woodford is no longer in charge and the fund is being wound up. Almost 80% of the publicly listed securities held by the fund, now renamed the LF Equity Income Fund, have been sold since mid-October, according to a statement from the administrator, Link Fund Solutions Ltd.A spokesman for Woodford Investment Management declined to comment.Housebuilders were some of the biggest beneficiaries of the post-election boost in equity values in London. Barratt Developments Plc, which was the fund’s largest holding as of June 30, rose by as much as 14.4% on Friday, its biggest intraday gain for more than 10 years. Taylor Wimpey Plc, another of the fund’s top 10 holdings, rose as much as 15.8%.Another of the once-feted stock picker’s funds enjoyed the largest increase in its asset values since its inception, up 6.6% on Friday. The Woodford Income Focus Fund has stopped investors from withdrawing cash, but unlike the flagship fund, the portfolio is not being liquidated and it will be passed on to a new manager.The fund’s holdings included BT Group Plc, which had fallen in recent weeks as Labour mooted nationalizing the telecommunications company, but climbed on Friday, and the Royal Bank of Scotland Group Plc, which gained the most in more than 10 years after the election result.“The election result brings to an end the paralysis that has affected Westminster and is a catalyst for investors to reconsider the value available in public U.K. equity markets,” Mark Barnett, Invesco Ltd. fund manager and Woodford’s former protege, wrote in a note to clients. U.K. companies had traded at substantial discount to their global peers since the 2016 referendum on whether the country should leave the European Union, he wrote.BlackRock Inc., which was hired to wind up the listed part of the portfolio, has so far sold 1.65 billion pounds ($2.2 billion) of assets, representing 79% of the value of the fund’s liquid assets and 56% of the total portfolio, Link said. It has reinvested the proceeds in FTSE 100 stocks, money market funds, government securities and commercial paper, according to the statement.A Link spokesman declined to comment on the details of the fund’s remaining assets.“Investors can take some solace in the fact that some of the assets that have been sold to date have been reinvested back into FTSE 100 trackers,” Ryan Hughes, head of active portfolios at AJ Bell Plc, said in an emailed statement. “So they will have benefited from some of the post-election bounce the index has seen so far today. However, this is likely to be scant consolation.”(Add details about performance of)To contact the reporters on this story: Benjamin Robertson in london at email@example.com;Lucca de Paoli in London at firstname.lastname@example.org;Suzy Waite in London at email@example.comTo contact the editors responsible for this story: Shelley Robinson at firstname.lastname@example.org, Patrick HenryFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
It was a big week for the global financial markets. The FED delivered for Trump, with Trump delivering a phase 1 deal and Johnson crushing the opposition.
(Bloomberg) -- U.K. domestic stocks surged after the Conservative Party’s election victory lifted the uncertainty that has persisted since the country voted to leave the European Union and removed concern about the Labour Party’s plans to nationalize assets.The FTSE 250 index gained 3.4% and closed at a record high. Banks, utilities, homebuilders and retailers led gains for U.K. stocks, with Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc both up at least 5.3% at the close in London. The FTSE 100’s gains were curbed by exporters falling on the pound’s strength.“In a world starved of yield, the U.K. equity market is awash with compelling dividend opportunities – this decisive election result means these companies will return to the radar of international investors,” James Uphaugh, chief investment officer at Majedie Asset Management, said. “As long-term, active investors we see a number of exciting opportunities given the enticing valuations.”But questions remain about the U.K.’s departure from the EU. “Enjoy the rise in U.K. share prices, but don’t be fooled into thinking we’ve found El Dorado,” said Jim Wood-Smith, chief investment officer, private clients at Hawksmoor Investment Management. “We have no idea what the deal will look like at the end of next year, or indeed if there will even be a deal.”See here for more reaction from strategists and economists. Here are the U.K. sectors and stocks moving the most:BanksDomestic banks including RBS, Lloyds and Virgin Money U.K. Plc soared across the board. Financial-services firms like Hargreaves Lansdown Plc and St James’s Place Plc also rallied.Mediobanca SpA analysts think the result should boost commercial banking income and upgraded its ratings for Lloyds, asset manager M&G Plc and insurer Direct Line Insurance Group Plc. Still, Citi said that fundamentals for U.K. banks are still not that strong.Deutsche Bank AG also reckons the result is a good outcome for U.K. insurers and may see them narrow the valuation gap to European peers.Nationalization TargetsWater firms Severn Trent Plc and United Utilities Group Plc, electricity grid operator National Grid Plc and energy firm SSE Plc all jumped. All had been targeted for nationalization by the Labour Party.Those companies have been recovering ground against their European peers as the chance of a Labour win receded, but the Tory majority and Jeremy Corbyn stepping down as Labour leader should now remove this risk for the sector.Postal service group Royal Mail Plc, telecoms operator BT Group Plc and transport firms like FirstGroup Plc and Go-Ahead Group Plc, all of which have also faced a nationalization-related threat, also rose.BT should now get investment stimulus for its Openreach arm to build out fiber broadband across the country, according to Jefferies.Retailers, Media and TravelFood retailers including Tesco Plc, J Sainsbury Plc and Wm Morrison Supermarkets Plc, as well as high street names like Marks & Spencer Group Plc and Next Plc rallied.“A strong Tory majority should provide improved consumer sentiment, solid disposable income growth and reduced input pressures,” Jefferies analysts including James Grzinic wrote in a note. While Tesco might be the U.K. stock that many investors will default to, the analysts also see “merits across most other U.K. large-cap retailers.”Travel operators and airlines are also surging as gains for the pound make overseas travel for Brits cheaper. HSBC analysts raised their ratings on British Airways-owner International Consolidated Airlines Group SA and Irish budget carrier Ryanair Holdings Plc on the clearer outlook.Broadcaster ITV Plc, which has seen a downturn in advertising spending linked to Brexit uncertainty, rose too.Homebuilders and PropertyHousebuilders including Barratt Developments Plc, Persimmon Plc and Taylor Wimpey Plc all rallied at least 12% as clarity on the outlook for Brexit could boost housing transactions. Citigroup Inc. says the sector should see a “healthy” re-rating. Companies that supply housebuilders, such as Travis Perkins Plc, also gained.Commercial-property stocks including British Land Co., Land Securities Group Plc and Hammerson Plc jumped. They should benefit from the extra clarity too, as this could boost appetite for U.K. property assets.OutsourcersU.K. government contractors like Capita Plc, Serco Group Plc, Babcock International Group Plc, QinetiQ Group Plc and Mitie Group Plc all rose. The clear majority for the Tories may mean contracts start to flow to the sector, including those related to Brexit.In addition, a Labour government was seen as more unfriendly for outsourcing stocks, RBC Capital Markets says. This will also underpin the share price gains.ExportersThe FTSE 100 rose 1.1%, buoyed by the election result and news that China and the U.S. agreed on the text of a phase one trade deal. Some index members, including gold stocks and large exporters such as AstraZeneca Plc and GlaxoSmithKline Plc, fell.Smallcap StocksThe FTSE Small Capitalisation Index rose 2.2% and the AIM 100 index rose 2.2%. Both are heavily domestically exposed and will benefit from the better outlook on Brexit and the U.K. economy.“The greatest share price appreciation may have come through in mid caps initially, but we expect capital to waterfall down the market capitalization levels into small caps and micro caps going forward,” said Gervais Williams, the head of equities at Premier Miton Investors.(Updates with closing prices.)\--With assistance from James Cone, Chiara Remondini, Kit Rees, Blaise Robinson and Lisa Pham.To contact the reporter on this story: Sam Unsted in London at email@example.comTo contact the editors responsible for this story: Beth Mellor at firstname.lastname@example.org;Celeste Perri at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Stocks in Europe rallied on Friday on relief the Conservatives won the U.K. general election as well as anticipation a U.S.-China trade deal will be announced.
Private investors who traded on expectations of a “Boris bounce” were rewarded on Friday morning when shares in domestic-facing UK companies surged following the decisive Conservative election victory. The FTSE 100 rallied by 2 per cent on Friday morning, led by domestic stocks. The FTSE 250 index rose by more than 4 per cent and the FTSE 350 by over 2 per cent.
Markets across Europe surged in early trade on Friday, hours after the Boris Johnson-led Conservative and Unionist Party won the U.K. general election . The uncertainty over the U.K.'s exit from the E.U. ...
Boris has won. The election is over. And this country will return to being normal again under a Conservative party with a manifesto thinner than the first chapter of À la recherche du temps perdu. But ...
The U.K. will leave the EU on January 31, leaving the economy vulnerable to the shape and content of a future trade deal
The British pound lost steam on Friday morning after topping $1.35 in the aftermath of the commanding Conservative victory in the general election. The pound fell back to $1.3370 from as high as $1.3515, though that's still far above the $1.3164 level from Thursday. The pound retreated to 1.1970 euros from 1.2082 euros, though that's above the 1.1826 euros level from Thursday.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Strategists and economists were overwhelmingly positive on the prospects for U.K. domestic stocks after the election handed a clear majority and mandate on Brexit to Boris Johnson’s Conservative Party, sending the pound up the most since 2017.“The U.K. is one of the most unloved and undervalued major stock markets” and with the uncertainty around Brexit receding further, “investors will start to rotate back to the U.K.,” Morgan Stanley economists led by Jacob Nell and Bruna Skarica wrote in a note.This will drive a significant outperformance for the domestically skewed FTSE 250 against the exporter-heavy FTSE 100. Eurozone equities are set to benefit too, Morgan Stanley said.Here’s what other strategists and analysts are saying:Citi, Benjamin NabarroThe U.K. is likely to see an “economic relief rally” that will boost sterling and risk assets and drive economic confidence. Some delayed investment is also likely to be unlocked.However, this confidence may fade as the end of the Brexit transition phase approaches and, in particular, if the government does not request a longer transition period by July 1.Goldman Sachs, Zach Pandl and Sharon BellDomestic equities should benefit from a re-rating of growth and lower political uncertainty. “We expect the main beneficiaries of this to be risk-sensitive areas, including small caps, the FTSE 250.”However, this isn’t the end of the Brexit story: the U.K. government will still have to negotiate new trade deals with the EU and other trade partners, and this may affect domestic assets.“So while we expect U.K. markets to benefit from a period of reduced uncertainty over the near-term, we will need to re-evaluate this view as the trade talks unfold.”Barclays, Emmanuel CauDisorderly Brexit and Labour government tail-risks being removed gives further upside for the pound, domestics versus exporters and Euro Stoxx 50 versus FTSE 100.A larger-than-expected majority give legs to U.K. domestic plays’ outperformance, with homebuilders, utilities and real estate likely to be supported the most.With the result effectively providing a floor to GBP, Barclays expects international U.K. equities to underperform their euro-area peers further into 2020.JPMorgan Asset Management, Karen WardAppetite for U.K. assets should improve materially in the coming days and weeks. Completing the Brexit process remains “a herculean task” that will take considerably longer than the 11 months currently planned, but in the near-term it’s likely U.K. equities will move higher alongside sterling.BNP Paribas, Paul HollingsworthThe election result will provide some certainty about the next steps for Brexit “and cements our expectations of fiscal stimulus” in the U.K. in 2020.A degree of Brexit uncertainty is still likely to persist over the course of 2020 and would only anticipate a “very modest recovery” in growth and for the Bank of England to leave interest rates on hold, BNP said.RBC“We would expect a Conservative majority to add to the allure of domestically-focused business at the expense of internationally-oriented companies.”The risk of bus and rail nationalization “would disappear” and a similarly positive impact is likely for water companies. Outsourcing firms are also likely to be boosted by the removal of the threat of a Labour government.Jefferies, David Owen“Has Christmas come early? It has if you want to buy U.K. stocks. Utilities, banks, builders and retail dominate our buy list, which includes BT, RBS, Centrica, Persimmon, Greencore, Dart Group, Paragon and Morrisons.”Meanwhile staples, miners and global industrials are most negatively impacted, like BATS, BAE Systems, IHG and Rentokil.Markets.com, Neil Wilson“For the markets and for business this is the perfect result -- a clear majority for the Tories, the Corbyn risk nullified entirely, a major reduction in uncertainty around Brexit and even a quick budget to inject the economy with some added impetus.”“The only doubts are around the next phase of Brexit -- the future relationship -- but with a large majority the government will be in a better place to negotiate and do what it needs to do.”Steinbeis & Haecker Asset Management, Markus Steinbeis“The brief relief and recovery of U.K. stock markets will be followed by disillusionment in a few weeks or months. In the short term, U.K. equities will reduce their valuation gap to other Western European markets, but longer term recession risks will gradually come to light. There is a threat of a significant capital outflows and loss of production capacity.”(Updates with comments from Goldman Sachs, JPMorgan AM)\--With assistance from Ksenia Galouchko, Kit Rees, James Cone, Michael Msika, Jan-Patrick Barnert, Macarena Munoz and Lisa Pham.To contact the reporters on this story: Sam Unsted in London at firstname.lastname@example.org;Joe Easton in London at email@example.comTo contact the editors responsible for this story: Beth Mellor at firstname.lastname@example.org, Paul JarvisFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Mercurial in his politics and personal life, Boris Johnson’s union with sterling is ever closer. Sterling is the symbol of the UK Independence party, whose thunder Mr Johnson has stolen. The strong showing for the Scottish National party may trigger the break-up of the UK.
FT subscribers can click here to receive Market Forces every day by email. Markets have enjoyed a victory lap in the wake of positive developments over trade and Brexit. A “skinny” trade deal that bestows a temporary truce between the two big powers still leaves the global economy looking a little shaky while waving a caution flag over equity valuations for Wall Street.
Tom Stevenson, investment director of Fidelity International, said Prime Minister Boris Johnson is now "unworried by the Brexiteer wing" after the commanding Conservative victory in the general election. "The pound reacted so positively to the expected big Conservative majority because it raises the chances of a closer alignment with Europe in the long run," he said. "Unworried by the Brexiteer wing of his party, Mr Johnson has more freedom to conduct the forthcoming trade negotiations as he chooses. It is not clear yet whether freedom from the Brexiteer wing of the party will see the PM pursue a hard Brexit or tack back to the centre ground and greater alignment with the EU."
The benchmark jumped as much as 0.5 per cent to a record intraday high as Chinese trade negotiators conducted a press conference in Beijing, revealing the developments they said were designed to boost confidence in global markets. The Nasdaq Composite finished 0.2 per cent higher, while the Dow Jones Industrial Averaged gained just 0.01 per cent. The two gauges both notched up intraday record highs, but only the tech-heavy Nasdaq managed to register a new peak closing level. after President Donald Trump tweeted that a trade deal with China was “VERY close”.
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. They estimated that each additional 1 percentage point increase in U.K. GDP growth would add to earnings per share growth about 3 percentage points to FTSE 100 , 5 percentage points to FTSE 250 and 11 percentage points to domestically-oriented U.K. stocks.
An economist said the Conservative victory in the general election will give the British economy some "breathing space" to recover after not growing at all in the three months to October. "Business confidence should recover, now that a no-deal Brexit isn't a risk in January 2020 and the outlook for domestic policy over the next five years is relatively clear," said Samuel Tombs, chief U.K. economist at Pantheon Macroeconomics. "Many firms will be able to invest, knowing that corporation tax likely won't rise, wages won't increase rapidly and Labour's socialist agenda will not be implemented soon." The rise in sterling should help keep CPI below the Bank of England's 2% target, he added.
Investors poured into companies that generate most of their revenue in Britain on Friday, after the Conservatives secured an easy victory in the general election.
Domestic-oriented, U.K. midcaps surged in early action Friday after the Conservatives secured a decisive general election victory, but top British stocks were largely left behind. The midcap FTSE 250 jumped 4% while the large-cap FTSE 100 added just 0.5%, as the surge in sterling weighed on big U.K.-based multinationals who generate the bulk of their revenue outside of the country. Big gainers in the FTSE 250 included Travis Perkins , up 19%, and Virgin Money UK , up 18%.
Deutsche Bank advised clients not to chase the British pound after sterling's massive gains overnight after the Conservatives secured a majority in Parliament. "We would be cautious in chasing any move higher in the pound, however, and remain neutral. The next focus will be the government's policy on the UK and EU future economic relationship, a budget early next year, and the Bank of England's monetary policy meeting next week," the bank said.
Britain's retail sector stocks were boosted by Boris Johnson's election win on Friday (December 13), as investors now expect better consumer sentiment and spending in the holiday season. Shares in the UK's four biggest supermarket groups were up. Tesco jumped over 4% early morning, while Marks & Spencer was up more than 9%. That helped the domestic-focused FTSE 250 index outperform the blue-chip FTSE 100, which is more reliant on big exporters. Analysts say consumer spending could go up as people head for grocery shops in the lead up to Christmas Day. Retailers will be helped too by the pound rallying to an 18-month high against the U.S. dollar, as the cost of importing goods and raw materials goes down. Fashion brands also had a boost. Shares in Associated British foods - owner of fashion retailer Primark - were up almost 6%. Shares in Next were up 4.2%. Brexit has weighed on Britain's property market this year. But with a clear path in the short term, shares in Kingfisher - owner of home improvement chain B&Q - were up over 5%.