HSBC Holdings Share News (HSBA)

LONDON (Alliance News) - UK shares have surged and the pound has also risen Friday as the Conservatives are on the verge of winning a surprise outright majority in the UK election, with housebuilders, support services companies, bookmakers and banks amongst the best-performing stocks.

With nearly all seats declared in the 2015 UK General Election, the Conservatives are on the verge of securing an outright majority, defying pre-election polls which had forecast a race which would be too close to call.

The leaders of the Liberal Democrats and UKIP have both resigned and Labour leader Ed Miliband looks set to do the same.

With 641 of 650 seats now in, The Tories have secured 325 seats, leaving them only one seat short of an outright majority of 326. The BBC is forecasting the party will surpass that mark, predicting it will win 331 seats.

Labour is currently on 229 seats, having so far lost a net 26 seats, the vast majority of which came in Scotland where the Scottish National Party surged to win 56 seats, a gain of 50 from the last time around.

"For the best part of 12 months the following sectors of transports, utilities, banking and house builders have been weighed down by concerns that the Labour Party's manifesto promises would kill investment incentives as well as threaten dividends for the companies in question," says Michael Hewson, chief market analyst at CMC Markets.

"This morning's realisation that none of these measures will come to pass has seen the market rebound like a coiled spring, and a cloud lifted on a number of important UK sectors with the FTSE250 hitting a record high in the process and seen the stocks in question rebound strongly," Hewson adds.

The FTSE 250 hit a new record high of 18,161.18. Only eight stocks in the whole index are down. In the FTSE 100, only Pearson is lower.

Despite the rally in stocks and the pound, analysts also caution that a Tory government brings about the risk of a European Union referendum and the threat of a so-called Brexit. Furthermore, the strength of the Scottish National Party raises questions about how the new UK government will deal with the surge of nationalism in Scotland.

"Uncertainties which are here to stay are the Brexit discussion and more autonomy for Scotland. We still expect an EU referendum sometimes in late 2017 which fuels the Brexit discussions. However, current polls suggest that the UK will rather stay in the EU than leave it," say Christoph Riniker, Head Strategy Research, Julius Baer and David Alexander Meier, Senior Economist, Julius Baer.

"With the very positive outcome for the SNP yesterday, discussions about more autonomy in any form for Scotland are most likely going forward. In contrast to the EU referendum this will be rather a near term event to be taken care of by the government," they add.

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Markets: London stock indices continue to surge higher mid-morning, with the pound also rising, on optimism of a Conservative government, as the Tories head towards an outright majority in the UK General Election. The FTSE 250 hit an all time high of 18,161.18. The pound hit a 2-month high of USD1.5523 against the dollar as markets endorsed the Conservative win.

US stock futures point to a higher open on Wall Street, with the DJIA, S&P 500 currently indicated to open up 0.2% and the Nasdaq 100 up 0.3%.

FTSE 100: up 1.9% at 7,017.06
FTSE 250: up 2.9% at 17,951.75
AIM ALL-SHARE: up 0.2% at 750.30
GBP: up at USD1.5424
EUR: down at USD1.1218
GOLD: up at USD1,185.32 an ounce
OIL (Brent): down at USD65.60 a barrel
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UK Election Reaction
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Shares in London-listed banks reacted positively as the Conservative Party looked set for a surprise majority victory in the UK's General Election. The outcome was welcomed by Anthony Browne, the chief executive of the UK's British Bankers' Association, who said that a "clear result" in the General Election was "good news" for the economy. "We will look to work with the new Government in a constructive manner. We need to focus now on implementing the reforms that have already been legislated for, and ensure that banking – our biggest export industry – remains globally competitive," Browne said in a statement. But the market reaction doesn't necessarily mean that the Conservative Party will go easy on the banks, which had feared even tougher regulation in the event of a government dominated by the Labour Party.
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The UK listed companies from the 'Big Six' energy firms in the UK saw their shares rise after UK election results suggested the Conservative party are set to win an outright majority, putting fears about Labour's proposed energy market reforms aside.
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Shares in British bookmakers Ladbrokes and William Hill have soared as the UK General Election results suggest that the Conservatives will return to power alone and regulatory risks posed by Labour proposals have been avoided.
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Shore Capital says the prospects of a majority Conservative government will benefit support service companies and outsourcers, with Babcock International, one of the companies that services the UK's nuclear missile programme, set to get the biggest boost. "The outcome of the UK General Election appears to us to be as positive a result as [support service companies] could have hoped for, not in the sense of a Conservative majority (they all profess to be politically neutral), but that they benefit from a Government able to lead policy implementation with firm and rapid (for Government) decision making," says Shore analyst Robin Speakman.
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Liberum says a Conservative-led government "is a more benign" outcome than that predicted by the opinion polls, which reduces, but does not eliminate, political risk for the UK public transport operators. The broker says that the risks associated with the most damaging policies proposed by Labour fall away. "However, we believe risks remain in regional bus, with the Conservatives having made a manifesto commitment to devolve greater powers to some English cities, explicitly including transport," says analyst Gerald Khoo.
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Shore Capital says a Conservative victory in the UK general election will benefit UK housebuilders, especially those with a London focus. "Under a Tory administration we can now expect the re-rating cycle we have mentioned and this has the scope to raise fair value estimates by 15-20% as we re-base the price to earnings we believe we should apply to projected peak cycle earnings," Hardy says. "We and the market have been discounting too much risk within this housing cycle and more importantly in the earnings performance after the cycle eventually peaks."
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Other Top Corporate News
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BG Group said its earnings and revenue in the first quarter of 2015 were substantially hit by the fall in the oil price which caused a poor performance in its production and exploration division. The company, which is being acquired by Royal Dutch Shell, said its pretax profit for the three months to end-March was USD708 million, down from USD1.89 billion a year earlier. BG Group reported earnings before interest tax, depreciation and amortisation in the quarter of USD1.59 billion, down over 40% from the USD2.71 billion reported a year earlier, whilst earnings before interest and tax more than halving to USD945 million from USD1.97 billion.
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Rolls-Royce Holdings maintained its earnings guidance for 2015, saying a ramp up in deliveries of Trent XWB engines for Airbus planes would help offset the impact of lower oil prices in its Land & Sea business. The aircraft and marine engine maker, which last year issued a string of profit warnings, said it expects its results to be weighted to the second half of the year.
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InterContinental Hotels Group growth in global revenue per available room in the first quarter of 2015, boosted by a strong performance in all of its operating regions, as it continues to expand its pipeline with the highest number of first quarter hotel signings in seven years. The hotel operator, which owns brands including Holiday Inn, Crowne Plaza and InterContinental Hotels, said global revenue per available room grew 5.9% in the first quarter, driven by an increased rate of 3.4% and growth in all four of the regions it operates in.
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Just Eat will buy Australian online takeaway company Menulog Group for AUD855 million, financed from the proceeds of an equity issue, a move that expands its reach into both Australia and New Zealand. Menulog has more than 5,500 restaurants and 1.4 million consumers, Just Eat said, and its order volume grew 96% in the year in the three months ended March 31. It generated GBP13.5 million in revenue in the year to March 31. The equity fundraising is expected to be launched in mid- to late-May, following receipt of the approval of the acquisition by the Foreign Investment Review Board in Australia. Completion of the equity fundraising is expected early to mid June.
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Man Group reported a net outflow in the first quarter of 2015 but said funds under management increased, largely due to positive investment performance and the recent acquisition of Connecticut-based Silvermine. Separately, Man Group said it is looking for its next chairman as Jon Aisbitt intends to step down in May 2016. Phillip Colebatch, the hedge fund manager's senior independent director, will lead the board committee tasked with finding his successor. Funds under management increased to USD78.1 billion from USD72.9 billion in the first three months of 2015. Man reported a net outflow of USD1.3 billion as redemptions exceeded sales. Foreign exchange rate movements resulted in a USD2.0 billion hit to funds under management, largely due to the strengthening of the US dollar against the euro and sterling.
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Laird said trading was in line with expectations in the first quarter of 2015 and said new product launches in the second half of the year will underpin the company's current full year outlook. The wireless connectivity and radio frequency engineering company said first quarter revenue rose 24% to GBP149 million from GBP120 million, and in dollar terms it rose to USD226 million from USD199 million. Revenue rose due to increased demand in 2014 that was pushed into 2015.
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AIM Movers
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Kalimantan Gold Corporation shares are up after it said drilling of the first four holes at the Beruang Kanan Main deposit has been completed and all four holes showed indications of copper mineralisation. Aeorema Communications is doing well afterit raised its guidance for the current financial year, saying it expects a strong finish based on recent order intake for events scheduled in May and June. It said it now expects revenue to exceed GBP4.2 million and pretax profit to exceed GBP350,000 in the year that ends June 30. Falanx Group has lost a quarter of its value after it raised GBP2.64 million via a discounted placing and subscription and extended its strategic partnership with cybersecurity company Assuria. It said it has issued 18.9 million shares at 14 pence per share to raise the funds. John Lewis of Hungerford is down after it reported an operating loss of GBP174,000 in the six months to February 28, compared with a GBP66,000 profit in the same period the year before, which it blamed on investments in the business and a slight drop in revenue following the "unplanned departure" of three of its top-performing sales people. It also warned that it doesn't think it'll be able to make up the shortfall in the traditionally stronger second half of the year and is therefore expecting to report a full-year loss. China Chaintek is another faller after its revenue fell 21% in the first quarter, exacerbated by a 34% decline during March, as the company was hit by manufacturing reform in China. China Chaintek reiterated its expectation that revenue and profit in 2015 will be substantially lower year-on-year. Xtract Resources is down after it completed a GBP3 million fundraising, with the company intending to use the proceeds to pursue acquisition opportunities. Xtract issued 1.2 billion shares at 0.25 pence per share.
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Other Top Economics And General
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UK house prices increased at a faster pace in April, data from Lloyds Banking Group's Halifax division showed. House prices advanced 1.6% in April from last month, when it gained 0.6%. This was the second consecutive growth in prices and exceeded a 0.3% rise forecast by economists. During three months to April, house prices rose 8.5% after rising 8.1% in three months to March. Economists had forecast a 7.8% annual growth. On a quarterly basis, house prices advanced 2.2%.
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China's exports logged an unexpected fall on weak demand in April and imports declined more than expected adding to hopes of more economic stimulus. Exports fell 6.2% in April from last year in yuan terms, data from the General Administration of Customs showed Friday. Economists had forecast a 0.9% rise for April. Imports registered a double-digit decrease of 16.1% annually, sharper than an expected drop of 8.4%. Consequently, the trade surplus came in at CNY 210.2 billion, below the consensus forecast of CNY 173.8 billion.
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Members of the Bank of Japan's monetary policy meeting said that the country's economic recovery remains on track, minutes from the central bank's April 7 and 8 meeting revealed on Friday. The members added that inflation expectations appear to be successfully rising following years of deflation. They added that business investment also looks to be on the uptick as corporate profits improve. "Japan's economy has continued its moderate recovery trend. Overseas economies -- mainly advanced economies -- have been recovering, albeit with a lackluster performance still seen in part," the minutes said. At the meeting, the BoJ decided to keep its benchmark interest rate steady at 0.10%.
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The US Senate voted Thursday 98 to 1 for legislation that would allow Congress to review the final nuclear deal with Iran. The measure, if adopted by the lower House of Representatives, would give Congress 30 days to approve or disapprove of the nuclear deal with Iran before any US sanctions are lifted. US President Barack Obama signaled he would sign the bill into law only after the Senate Foreign Relations Committee incorporated several amendments. The bill survived several efforts by opposition Republicans to add poison pills to the measure, such as demanding that Iran recognize Israel.
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Afternoon Watchlist (all times in BST)

13:30 US Nonfarm Payrolls
15:00 US Wholesale Inventories
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Monday's UK Corporate Events

Finsbury Growth & Income Trust - Half Year Results
Dignity - Q1 Results
Diploma - Half Year Results
Lonmin - Half Year Results
ITE Group - Half Year Results
Spirax-Sarco Engineering - Interim Management Statement
GW Pharmaceuticals - Half Year Results
Nature Group - Full Year Results
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Saturday's Key Economic Events (all times in BST)

n/a China Consumer Price Index
n/a China Producer Price Index

Monday's Key Economic Events (all times in BST)

All Day EU Eurogroup meeting
n/a China New Loans
n/a Germany Wholesale Price Index
12:00 UK BoE Interest Rate Decision
15:00 US Labor Market Conditions Index
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