At the close: FTSE 100 charges into bull territory as investors cheer leadership certainty and the weak pound drives up profits
Well, there it is. The FTSE 100 has swung from bear market territory to a bull market in just over six months.
The twists and turns of the day's political events gave a fresh boost to the global FTSE 100, while the UK focused FTSE 250 also posted strong gains.
Housebuilders, such as Barrat Developments and Berkeley, ended between seven and eight per cent higher, helping the FTSE 100 to close up 1.4 per cent – or 92.22 points – at 6,682.86.
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The mid cap FTSE 250 ended 3.3 per cent higher.
The political certainty from the de-facto appointment as Theresa May as Prime Minister gave a boost to sentiment. Spread-betting firm IG's Chris Beauchamp said the extraordinary scenes in Westminster today have given heart to the City:
UK politics continues to provide the most compelling TV viewing of the year so far, as Teresa May’s last opponent abandons the field.
The bounce in UK mid-caps is more than partly due to hopes that, with Remainer May as PM, talks with Europe may be smoother, while the disappearance of a summer leadership contest has helped clear road ahead for UK equities.
Michael Hewson, chief market analyst at CMC Markets, said:
Things are a bit clearer – we know who the next prime minister is going to be.
We will get nonsense about a general election but that's the last thing the country needs after the uncertainty created by the referendum.
Construction related firms and miners also performed strongly.
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Anglo American topped the blue chip index, up by 8.6 per cent at the close, while building services firm Travis Perkins ended up 7.8 per cent.
House builders Persimmon, Taylor Wimpey, and Berkeley Group were up between seven and 7.1 per cent, recouping somewhat from heavy sell offs last week.
Engineering group Rolls Royce was one of the few fallers for the day. It languished at the bottom of the index, dropping by 1.5 per cent after announcing it would buy the outstanding 53.1 per cent shareholding in Industria de Turbo Propulsores owned by Sener Grupo de Ingeniería.
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The pound was earlier hovering just above last week's 31-year low as the market continues to expect the Bank of England to ease monetary policy on Thursday in response to the vote to quit the European Union.
Markets continue to expect governor Mark Carney to cut rates, pricing in a more than 70 per cent chance of interest rates being lowed this week, a massive jump from 11 per cent just before the referendum.
Jordan Hiscott, chief trader at ayondo markets, said:
Twitter rumours flying just before 12.00pm today of Andrea Leadsom’s plans to step down from the leadership race coincided with a short sharp move in GBP/USD, and initially dollar fell to a session low of 1.2850 on sustained leveraged sell side flow.
Once her decision was officially confirmed at 12.15pm, leaving May in a one-horse race, dollar moved higher with several large stops triggering pushing up to 1.3020.
While this news may not have warranted this kind of move higher, it illustrates the relatively liquid nature of GBP/USD at the moment.