London markets ignore Johnson exit as banks lead FTSE 100 higher

London markets today shrugged off prime minister Boris Johnson bowing to days of pressure and ministerial resignations and quitting office.

The capital’s premier index jumped 1.14 per cent to 7,189.08 points, while the domestically-focused mid-cap FTSE 250 index, climbed 1.51 per cent to 18,875.53 points.

Investors have been muted to the upheaval at Westminster over the past few days, with the City’s main indexes registering gains yesterday and today.

The pound was boosted by Johnson’s exit, strengthening around 0.6 per cent to buy $1.2003.

Sterling has been on a downward spiral in the past few months, mainly caused by investors fretting over the UK tipping into recession and the US Federal Reserve hiking interest rates rapidly.

Yields on UK government debt bumped higher as investors mulled how a new Conservative leader will shape Britain’s economic policy. Yields and prices move inversely.

Financials led the FTSE 100 higher, with lenders leading the way as investors bet on the Bank of England having to hike interest rates quickly in response to the new Tory administration cutting taxes.

NatWest and Britain’s biggest lender HSBC both climbed more than 3.2 per cent. 

Analysts have cautioned that lowering taxes may fuel inflation by bumping household spending, forcing the Bank to accelerate its rate hike cycle, which has boosted sentiment to banks.

FTSE 250-led energy firm Drax Group was among the biggest risers on the index, gaining over seven per cent after the government earlier week announced it will keep its coal power plant open.