A New Age for UK Housebuilding

European stocks closed lower on Friday as investors digested the Labour Party’s landslide U.K. election victory.

The U.K.’s FTSE 100 index closed 0.45% lower, while the broader pan-European Stoxx 600 index provisionally finished the week 0.22% lower.

The primary news story on investors’ minds Friday was the result of the U.K.’s general election, with the opposition Labour Party winning a huge parliamentary majority, unseating the incumbent Conservatives after 14 years.

The FTSE 350 household goods and home construction index ended the session 2.5% higher on Friday, as traders reacted to news of the Labour Party’s win.

Looking at individual stocks within the sector, Vistry Group, Barratt Developments and Persimmon shares were up around 3%, while Taylor Wimpey rose by more than 2%.

Labour passed the threshold needed to govern alone early on Friday morning, as outgoing PM Rishi Sunak conceded defeat. Keir Starmer, leader of the center-left Labour Party, has now become the country’s new prime minister. Analysts expect the Labour victory to boost U.K. markets over time, particularly when it comes to housebuilding.

In a research note Friday, analysts at RBC Capital Markets said that if Labour’s election pledges turn into policy, it could mark the dawning of a “new age” for U.K. housebuilding.

“Over the last few years housebuilders’ potential has been hamstrung, but over the next few this potential is likely to be unleashed.”

“If the new Government’s walk matches its talk we expect the sector to re-rate, and in the very short term we suspect that the talk alone will be enough to lift share prices,” they added.

Source: CNBC