Pedestrians walk past a branch of the Royal Bank of Scotland in London. RBS shares rallied 2.46% to 366 pence yesterday.
AFP/London
Europe’s main stock markets jumped out of the blocks early yesterday as investors welcomed news that Scotland voted to reject independence from the United Kingdom, but ended the week mixed.
London’s benchmark FTSE 100 index, after impressive morning gains, closed up 0.27% to 6,837.92 points.
In Paris, the CAC 40 slipped 0.08% to 4,461.22 points, while Frankfurt’s DAX index ended virtually unchanged, edging up 0.01% to 9,799.26 points.
Sterling hit a two-year euro high in anticipation of victory for the “No” campaign before recoiling.
Markets were mixed on Wall Street.
“After the initial jubilation, traders have been wary of getting too excited about the (Scotland) result,” said Tony Cross, market analyst at Trustnet Direct.
“Perhaps most telling is the fact that the pound has retreated from earlier highs... there’s uncertainty and as we well know, this isn’t what the markets want to see.”
Scotland rejected independence in a referendum that left the centuries-old United Kingdom intact but paved the way for a major transfer of powers away from London.
Despite a surge in nationalist support in the final fortnight of the campaign, the “No” camp secured 55.30% of the vote against 44.70% for the pro-independence “Yes” camp in Thursday’s referendum.
The British pound began yesterday strongly before falling slightly. The euro tumbled to 78.10 pence on initial returns pointing to a victory for the “No” camp. That was the lowest level since July 2012 and compared with 78.82 pence late in New York on Thursday. It later recovered to 78.66 pence.
At the same time, sterling jumped to a two-and-a-half-week peak at $1.6525, before dipping to $1.6316.
The British pound had come under severe pressure in recent weeks as opinion polls had showed rising support for the “Yes” campaign.
In the event of independence, First Minister Alex Salmond and his Scottish National Party (SNP) had wanted Scotland to continue using the pound and enter into a formal, euro-style monetary union with what would remain of the United Kingdom.
But the British government had rejected the arrangement.
On the London stock market, Britain’s Royal Bank of Scotland and Lloyds Banking Group saw their shares jump after both lenders scrapped contingency plans to switch operations to England in the event of Scottish independence.
RBS shares rallied 2.46% to 366 pence, and Lloyds gained 1.25% to 76.82 pence.
“The announcement we made about moving our registered head office to England was part of a contingency plan to ensure certainty and stability for our customers, staff and shareholders should there be a ‘Yes’ vote,” said an RBS spokesman.
“A relief rally is in the making in UK markets, and key areas to watch will be the banks such as RBS and Lloyds, as well as big Scottish firms,” said Chris Beauchamp, analyst at IG trading group.
“Investors in these firms will be relieved that management will be able to devote their time to business performance, rather than fretting about contract changes or headquarters moves.”
On Wall Street, the Dow Jones Industrial Average climbed 0.12% to 17,286.83 points and the tech-rich Nasdaq lost 0.10% to stand at 4,588.65 by midday.
The broad-based S&P had advanced 0.09% to 2,013.21 after posting a record high earlier in the day.
The yield on British 10-year debt rose.
The rate of return rose to 2.603% at 0700 GMT, from 2.575% at Thursday’s close.
