Following the outcome of the UK general election last week, the FTSE 250 equity index was on trend, pushed to unprecedented highs with the news that the Conservative's had won an overall majority. Asset prices have clawed their way back and the pound made its most substantial one-day rise in five years against the dollar. These gains are in stark contrast to pre-election uncertainty, when concerns over the market's volatility reached their highest level since the last UK election in May 2010.
Bill O'Neill, head of the UK investment office at UBS Wealth Management called the turnaround "far less complicated than the market's worst fears."
The FTSE 100 was 160 points (2.3 per cent) up at 7,046.82, lead by financial stocks and utilities. The big winners included British Gas owner, Centrica, which climbed 8.1 per cent to 278.2 pence, Lloyds Banking Group which went up by 5.7 per cent to 86.9 pence and RBS which rose 6.1 per cent to 352.4 pence. Meanwhile the mid-cap FTSE 250 hit a record high of 18,161.18.
Volumes followed suit: almost €4.2bn worth of FTSE 100 stocks changed hands early Friday morning, according to data provided by stock exchange BATS Chi-X Europe.
The FTSE 100 has been lifted to a 7.3 per cent gain this year; the market is ahead of the S&P 500 in sterling and dollar terms, but lags behind Eurozone markets.
Speaking to the Financial Times online, Barclays analyst Ian Scott said: "The removal of uncertainty and the maintenance of something approaching the status quo should lead to a near-term bounce in the UK market and outperformance relative to European and global peers."
There is less comfort to be found, however, over the prospect of a Tory referendum on Britain's EU membership, which could have negative ramifications for sterling and the government bond.
HSBC analyst, Simon Wells, speculated on "far-reaching" implications should Britain pull out of Europe. "The Bank of England may soon be turning its attention to the regulatory and financial stability implications of such a scenario", Mr Wells added.