London market stages ‘relief rally’ after No vote

Sterling climbed by almost 1 per cent overnight to as high as $1.65 against the US dollar as traders reacted to the first poll results showing support for the No campaign.

The pound had slumped to a ten-month low at just above $1.60 two weeks ago amid fears about the impact that a Yes vote would have on economic stability.

Within minutes of opening, the FTSE 100 gained almost 42 points to stand at 6,861.

Tony Cross, market analyst at Trustnet Direct, said: “The clear winners are arguably rather predictable. RBS, Babcock, Weir, Lloyds and SSE are all clustered at the top of the table although how sustainable the relief rally will be remains to be seen.”

Mark Dampier, head of investment research at Hargreaves Lansdown, said: “From an investor’s perspective, it is a relief to resolve this uncertainty and the markets look to react accordingly.

“It remains business as usual – it’s highly unlikely there will be any real devolution work done until after the general election.”

Bill O’Neill, head of the UK investment office at UBS Wealth Management, said: “Investors decided early on in this campaign that there would be a No victory, and confidence returned to the markets well before voting day. There will be a relief rally, but it will be limited because the market has not aggressively accounted for a Yes vote.

“Sterling will benefit in the short term, while equities will see little impact. Scotland-exposed equities will retain a risk premium given requirements for greater devolution. Gilts will perform modestly better as risk premiums fall.”