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Positive mood for traders over election result

A crushing victory for the pro-business Conservative party has seen both the FTSE 100 and sterling charge higher. 

Canary Wharf
Source: Bloomberg

Traders had an extra bounce in their step as they made their way into the City today, as a Conservative majority clears up a lot of the uncertainty that had hung over the country. Although far from perfect it does offer a known quantity, and without the complications of a Liberal Democrats coalition it may well pave the way for a slightly faster-paced UK recovery.

These positives are outweighing the worries over the Conservatives bringing about an EU referendum as this has been perceived as a vote-winning decision more than anything else, and the markets can worry about that much closer to the time. Considering how blasé both currency and equity markets had been in the run-up to this election any hangovers should be long gone by the time Monday rolls around.

Almost lost in the sea of political coverage has been the fact that a number of UK companies have posted figures. Considering Shell’s current efforts to acquire BG Group, it has effectively rendered these figures redundant.

Not so for Intercontinental Hotels which has seen room revenues increase across almost all regions as the popularity of staycations has diminished. The demise of the Labour party has also signalled a renewed investor appetite for the energy-providing companies, with the threat of increased powers being given to watchdogs for the time being lifted.

The Conservatives' lighter touch when it comes to the City should also see financial stocks enjoy a pick-me-up, although the now seasonal threats from homesick HSBC continue to plague the FTSE.

The first Friday of the month and once again traders will be digging out their crystal balls in an attempt to predict how strong the US employment markets are ahead of today’s non-farm payrolls figures. In a week where Federal Reserve chair Janet Yellen has already voiced her concerns about equities being overpriced, the markets could do with a boost especially as the US reporting season is winding down and failing to offer quite as much impetus as has been enjoyed over the preceding weeks.

Ahead of the open we expect the Dow Jones to start 33 points higher at 17,957.

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