Financial markets are welcoming David Cameron’s triumph, despite concerns over EU referendum and Scottish independenceLatest: Moody’s warns on referendumMansions in demand as Tories keep powerFTSE 100 jumps 2%Banks, bookies, energy firms rallyPound surgesBut what about Scotland and Europe? 12.41pm BST The pound has now gained ground against every rival foreign currency today:Now, not a single #currency is rising v #sterling (out of 174)... pic.twitter.com/Q0qfbh9Rlz 12.38pm BST Philip Shaw of Investec has joined the ranks of experts warning that a Brexit referendum could spook the financial markets:Once the dust has settled on the shocks and surprises of the 7 May General Election, there are a number of questions still to be answered. One other issue, we would also remind readers of is that the Conservatives have promised to hold a referendum on the UK’s EU membership by end-2017. Although this is far enough down the line to not worry markets at this point, much like the Scottish independence referendum of September-2014, this could become a major market issue as we approach the poll. 12.31pm BST Good headline from Investec Economics reaction, 'leaders resign left, right and centre… ' #GE2015 pic.twitter.com/EBoiTYv0Nb 12.26pm BST Credit rating agency Moody’s has warned that a referendum over Britain’s European future could hurt the economy, and trigger a downgrade.Kathrin Muehlbronner, Vice President-Senior Credit Officer at Moody’s, says:“While the election result will have no impact on the UK’s rating, if the Conservative Party’s plan to hold a referendum on European Union membership results in the UK’s exit this could have consequences for the whole economy, including potentially for the sovereign rating, if the UK was unable to broadly replicate the benefits of membership.”“The outlook for the country’s public finances has improved irrespective of the government’s composition: following several years of very subdued real GDP growth, growth accelerated significantly in 2014. We expect the economy to continue to expand at rates above 2% for the next several years, as the effects of the financial crisis fade.”Moody's says #brexit "could potentially have consequences for sovereign rating". Risk hasn't disappeared following #GE2015 result...And here we go: Moody's warns about UK ratings if UK votes for exit from EU 12.06pm BST It’s been another extremely busy morning on London’s stock market.If value traded stays at this pace over the day – and if bond markets put in another similar performance - total € traded across Europe by 4.30 p.m. could exceed yesterday. 11.39am BST Some economists reckon that the election result could mean interest rates could remain at record lows for longer.The logic is that the Bank of England will feel less need to hike borrowing costs if George Osborne is implementing tougher fiscal policy in the Treasury.A modestly softer growth outlook and tightening fiscal stance suggests the MPC will not feel rushed into tightening monetary policy. 11.37am BST Conservatives now one seat away from a majority. Astonishing with a capital A. 11.16am BST Britain’s bankers reckon the election result is ‘good news’ for the economy (it’s certainly good news for bankers who didn’t fancy paying 50% income tax): 11.09am BST Shares are still buoyant in London, but they might slide once investors ponder the prospect of a referendum on Britain’s EU membership.John Wyn-Evans, head of investment strategy at Investec Wealth & Investment, has sounded a note of caution:The markets’ reaction to the result has been predictably positive, with the pound being the initial beneficiary. Gilt yields have also fallen on the prospect of more austerity and a lower deficit while shares are rising, unsurprisingly led by house builders, domestic retail banks and regulated utilities and outsourcing companies. To put things into perspective, though, that still leaves the index below where it was a week last Tuesday.“However, without wishing to throw too much cold water on the celebrations, we will return to “business as usual” very shortly, and there is the small matter of a promised referendum on membership of Europe to negotiate. 11.08am BST Related: International investors rush back into UK property market 10.15am BST The sight of David Cameron heading back into Downing Street has sparked a flurry of interest from wealthy foreigners looking to buy a multi-million pound house in London.That’s according to Michelle van Vuuren, Managing Director of Residential Development at Sotheby’s International Realty UK. She says:“A Conservative victory – whether outright or otherwise – will give the housing market what it wants: stability. The removal of the uncertainty that has clouded the last year of the Coalition will allow developers to plan confidently for the medium term with a consistent economic policy. Having said that, we do hope to see the Tories come good on their annual pledge of 200,000 new homes and freeing up Brownfield sites for development. Increasing the supply of homes is the only way to truly overcome the hurdles that the housing market places for the majority of buyers. At the top end – for the next five years at least – a cessation of the clamour for a Mansion Tax will see a number of transactions that have stalled to come back on line as certitude creeps back into the market. It is going to be an exciting time to be in the London market over the Summer! 9.53am BST Another sign that expensive houses are going to get even pricierDouglas & Gordon's @ed_mead: "This is a very bullish outcome for London real estate markets at all price levels". £2m+ homes could go up 20% 9.45am BST Two property firms have just rushed out statements, predicting that the top end of Britain’s housing market will benefit from the Conservative victory.With an effective Conservative majority, or Conservative-led coalition now looking like the most likely result, we expect much of the deferred demand from the pre-election period to flow back into the prime market over the remainder of 2015 and 2016, particularly given that the spectre of a mansion tax is now removed from the market.“We now expect there to be greater activity in the housing market, especially in the £2 million plus markets facing the prospect of a Mansion Tax.“We anticipate this Conservative led Government to turn its attention from implementing policies that stimulated demand in the housing market to addressing the lack of housing supply. Sticking to its pledge to boost housebuilding through the provision of more affordable housing and more garden cities should prove welcome. 9.34am BST Champagne corks may be popping in the City this lunchtime, but when investors sober up they may remember that Britain faces several serious challenges.The first is the unbalanced state of the UK economy. A budget deficit of 5% of national income is matched by a similar-sized balance of payments deficit, which reflects the fact that Britain consistently imports more than it exports. A fall in sterling will be needed to close the trade gap, and there will need to be a shift in economic focus from consumer spending to investment and manufacturing.The second factor is politics. Conservative strategists will already be thinking about how to win again in 2020, and the best way of doing that is to get the economic and political cycles aligned. In broad terms, that means getting any bad news out of the way as quickly as possible. Specifically, it means the Government will want to front-load austerity in the hope that healthier public finances will permit tax cuts from the middle of the parliament onwards.Larry Elliott on why the post-election celebrations in the City may be brief - http://t.co/LlwLPFT9wo 9.15am BST Vince Cable’s defeat means Britain is certain to get a new secretary of state for Business, Innovation and Skills.Terry Scuoler, chief executive of EEF, the manufacturers’ organisation, is hoping for a “really big hitter” to tackle the UK’s long-term problems:He or she will have an in-tray which will include the need to tackle some of the issues which will help Britain embed and build on the recovery.These include reversing the trade deficit, tackling an energy policy which remains a mess and redoubling efforts to deal with a creaking infrastructure by getting on with important projects, especially building a new airport hub. 9.04am BST Here’s today’s City reaction in a garish, pushy nutshell:Foxtons shares are up 13 per cent... http://t.co/JcVhEvFPo6 #GE2015 pic.twitter.com/y30d3H2Uz5 8.57am BST Engineering firm Babcock has rallied by almost 6.5% this morning. Babcock has a big contract to build the next-generation of Trident submarines; analysts feared it was vulnerable if the Scottish Nationalist Party (which wants to scrap Trident) had supported a Labour government. 8.50am BST Transport stocks also surging, National Express, Stagecoach, Go-Ahead Group all higher. 8.40am BST City trading floor have been gripped by the sight of Ed Balls, shadow chancellor, losing his Morley and Outwood seat by 422 votes.on a trading floor in city: big cheer was heard when Ed Balls lost his seat..The consensus is that FTSE might trade sideways from here and then a possibly volume spike and price rise if/when a Tory majority is confirmed.“Clients who bought the FTSE yesterday are taking profits ....If you’ve been gifted 100 points on the FTSE, you’re probably going to pocket that.”“There are also a number of people buying FTSE this morning, but these are all new positions. The assume that a Tory administration will automatically be good for the economy. That is also why there are a number of buyers of the banks.” 8.34am BST Britain’s government debt is also rallying this morning. The yield on 10-year gilts has tumbled to 1.84%, down from almost 2% earlier this week. That means the cost of borrowing has fallen.“Investors see the UK as a safe haven again. Gilts are a good place to place their money. The result takes the uncertainty out of it”. 8.31am BST The FTSE 250 index of smaller companies has just hit a record high.Bookmaker Ladbrokes are up 10% (Labour had planned a crackdown on betting firms), followed by housebuilder Berkeley Group (+9%) and estate agent Savills (+8%).FTSE250 at a record high #FTSE250 8.19am BST Nick Serff, senior market maker at City Index, explains why shares are surging this morning: “After the global Greek euro concerns we had a snapback yesterday as the markets were oversold. But a potential Conservative majority is a big thing. It’s the certainty it gives to the City. It is the best outcome for the FTSE.” 8.15am BST There are some stunning moves in the City this morning -- here’s the top risers on the FTSE 100. 8.09am BST The FTSE 100 index has surged by 2%, or 148 points, in early trading t0 7028 points as the City welcomes the election result.As expected, banks, energy firms and builders are leading the way. More to follow... 8.05am BST Shares have started trading in London, but we’ve not got the full opening price yet -- suggesting some companies are going to surge..Still waiting on prints for UK banks out of the opening auction, that will give FTSE extra kick 8.02am BST No coalition partner to appease = no watering down. So we get to see where £12bn of welfare cuts are coming from. 8.00am BST Britain should now brace itself for another bout of austerity. We know that £12bn of cuts are pencilled in; we just don’t know where.As Vicky Redwood of Capital Economics puts it:A Tory victory means that the economy will have to endure a fairly aggressive renewal of the fiscal squeeze. 7.57am BST The Conservatives are now projected to win a wafer-thin majority of two seats.If he has increased vote share... That is first time in 60 years for an incumbent prime minister pic.twitter.com/WmitXDCnKQ 7.50am BST Shares in banks and energy companies are set to jump by over 3% when the stock market opens in 15 minutes time. 7.38am BST Sterling +2% vs euro, on course for its biggest daily rise since January 2009. 7.34am BST Half an hour to go, and FTSE100 forecast to start +130 at 7017. 7.33am BST I just caught up with Jeremy Cook, chief economist at currency exchange firm World First, who pulled an election all-nighter.He explains that the pound jumped because last night’s exit poll was so decisive - showing that the Conservatives might come within 10 seats of a majority.“A majority wasn’t priced in... so everyone has been given a little more certainty than they expected.”Uncertainty of 2010 exit poll rattled the pound. Certainty of last night's has got sterling firing on all cylinders #GE2015Nicola Sturgeon must decide what she does with her seats. Does she build a left-unity coalition, or keep banging the independence drum?It was a big issue in rural campaigns, and if David Cameron were to go back on it it would cause a lot of problems with the grass roots.Sterling gains weakening off - maybe a tacit admission that questions on Brexit and Scottish Referendum need to be answered. #GE2015 7.16am BST The pound is also romping up against the euro, gaining almost 2% to €1.3794. 7.09am BST There’s a real feeling of optimism building in the City. The FTSE is now expected to surge by 120 points, or around 2%.We are now calling #FTSE100 to open +120 points and trade above 7000 level at 8am market open 6.59am BST It didn’t take markets long to react to the 10pm exit poll shock:GBP/USD: spot the exit poll moment. pic.twitter.com/oSOHTvzZjm 6.55am BST Market analyst Louise Cooper reckons the pound could keep surging as more results come in: This is because as the old mantra goes, “markets hate uncertainty”. Cameron has governed for the last five years and investors know what they are getting with Cameron and Osborne. Better the devil you know and all that. 6.53am BST Stan Shamu, analyst at IG, explains why the FTSE 100 is going to surge at 8am:With the Conservatives appearing to have gained ground and unexpectedly gaining seats, this seems like it is the market friendly result. It remains to be seen how many additional seats the Conservatives will need from a partner but with the current projections it will be a tiny amount. Election talk is likely to spill over into the weekend and it’ll be interesting to see how long the momentum in the FTSE and sterling can last. 6.51am BST My colleagues Claire Phipps and Andrew Sparrow have launched a new live-blog covering the general election aftermath: Related: Election 2015 live: Labour and Lib Dems crushed in shock election result 6.46am BST Shares in London are expected to surge this morning, as City traders digest the news that David Cameron has pulled off an unexpected success.Spread-betting firms are calling the blue-chip FTSE 100 index up around 100 points. Trading begins at 8am.City boys betting through IG put Tories at 322. 'V busy night for traders'. Ftse bets predict 95 point surge.Currently forecasting #FTSE100 to open +100pts when markets open in over 2hrs time 6.44am BST Guardian front page 6am edition pic.twitter.com/rWeJVGff0l 6.43am BST 6.38am BST The pound has posted its biggest jump against the US dollar since 2009 , as the election results suggest the Conservative Party has triumphed at the polls.Sterling leapt by 1% when the exit polls were released at 10pm, showing that the Tories could take 316 seats - nearly an overall majority.The pound's been pretty stable since that exit poll spike at 10pm - still up 1% at $1.54 pic.twitter.com/JhtW7mfIhj 6.33am BST Good morning. The pound is soaring, and shares are set to surge in London, after one of the most unexpected general election results in recent British history.#GE2015 results as of 6am ... http://t.co/V3ZjyEh6kZ pic.twitter.com/p0lMbeYxKSAll LibDem cabinet ministers have lost their seats and their jobs. Apart from @nick_clegg #GE2015 Related: Election results live: David Cameron set for No 10 in crushing night for Labour Continue reading...
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