UK shares surged ahead for the seventh consecutive session yesterday, as a raft of mid-cap companies were expected to benefit from the 2012 Olympics and the wider market enjoyed a fillip from London's victory.
The surprise Olympics victory sent traders scurrying for stocks which might be boosted by construction work and other benefits from the Games.
The mid-cap FTSE 250 index, which includes most of these companies, shot to an all-time high after recording its best one-day gain since September 2003. Shares in some of the Government's biggest building contractors also surged. Balfour Beatty, WS Atkins and Carillion - all leading players in the private finance initiative for funding major construction projects - enjoyed share price gains of 5 per cent apiece. The FTSE 250 jumped 89.5 points to close at 7,496.9.
Early estimates suggested that the Games could create up to 50,000 jobs in the engineering industry. Philip Whiteman, the chief executive of the science and engineering council, Semta, said: "The vital infrastructure work involved in getting London ready to host such a giant event will mean thousands of new jobs in our industry."
The economic boost from the Games is likely to be small in the context of the size of the overall economy, according to the fund management group F&C Asset Management, but many stock market sectors can expect a significant boost.
F&C rushed out a list of favoured stocks which could be expected to benefit. These included Morgan Sindall, a specialist in the construction of tunnels, which will be required as part of the upgrade of rail links between Games venues, and environmental consultancies such as RPS Group. Most of F&C's tips ended strongly higher. Shares in Quintain Estates & Development, which owns land around the Millennium Dome, where badminton and gymnastics will be held, rose 4 per cent, while leisure, catering, transport and media companies also got an immediate boost.
The general mood of euphoria which swept the City added to the bullish performance of the market. Traders were cock-a-hoop, and amusing photographs showing piles of half price "Paris 2012" T-shirts pinged across dealing rooms.
The FTSE 100 extended its recent winning streak for the seventh day in a row. It was above 5,200 for the first time in three years when the market opened yesterday morning, and continued its advance throughout the day. At last night's close of 5,229.6, it stood at its highest level since May 2002 and had risen almost 200 points since last Monday - in large measure because of the benefits of the rising oil price to BP and Shell, two of its largest constituents.
Darren Winder, an equity strategist at UBS, said: "Although 2012 is a long way away, the economic growth, the additional employment and the boost to some areas of the market are a clear positive. All this is adding to what is still a very favourable profit picture for UK companies."
A poll of East End estate agents said that 40 per cent of them had experienced an upswing in interest yesterday afternoon.Reuse content