Newspaper article The Evening Standard (London, England)

Tory Cakewalk or Labour Upset? How Vote Could Move Markets

Newspaper article The Evening Standard (London, England)

Tory Cakewalk or Labour Upset? How Vote Could Move Markets

Article excerpt

Byline: ECONOMIC ANALYSIS Russell Lynch

AFTER a dire general election campaign belatedly brought to life by Conservative incompetence, the big day is finally here. And for the third time in as many years, the City is gearing up for an all-nighter ready to trade on the outcome of Theresa May's surprise dash for a mandate.

As the results roll in tonight, the shape and strength of the next government is likely to have an immediate impact on shares, stocks and bonds as the PM's gambit reveals itself as a masterstroke or a costly gamble. But how will financial markets react tonight and tomorrow? 300 or fewer Con seats: Labour win/SNP coalition Tin hats on. A massive shock, and as the old saw goes, markets hate uncertainty. A Labour win or minority propped up by the SNP and Liberal Democrats puts the prospect of a second EU referendum and another Scottish referendum on the table (when the Nats think they can win it). Prospects of a Labour spending spree trigger a gilt sell-off, as the Bank of England eventually hikes rates more quickly to counter much looser fiscal policy. Shares plunge as business braces for a PS49 billion tax hit and a "Tobin tax" on financial transaction looms. Several corporates accelerate plans to scarper the UK (before they get nationalised). Energy shares and banks are a no-no particularly RBS, which Labour has pledged to break up.

300-325 Con seats: hung parliament Another near-seismic result which puts Theresa May in minority government territory, propped up by Unionists but under huge pressure to resign. Sterling slumps below $1.20 and gilts come under pressure again. The pound's weakness gives an initial fillip to the FTSE 100 boosting the value of its international earnings but the domestically-focused FTSE 250 sells off. Longer term, the prospect of horse trading and probably another general election this year has investors running for safe havens like gold. A badly hung parliament will spell weeks of uncertainty in financial markets. German bunds and Treasuries jump, along with the Swiss franc.

326-350 Con seats: slim majority (one to 50) A win at least for May but far from a ringing endorsement which will still prompt calls for her to quit and a possible challenge. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.