Political uncertainty usually means a tumultuous time for markets. Just as Brexit and a Trump win were surprises that sent markets spiralling into volatility, the upcoming UK snap election might have a significant impact on the stock market as well as the pound sterling. Investment expert Justin Kendrick weighs in on behalf of Crossinvest.
How will the UK snap election results affect the stock market?
The FTSE 100 had essentially assumed it would be a solid Conservative victory until recent polls indicated a much closer race – even perhaps a hung parliament, which means there won’t be a party with clear majority seats in parliament. The equity market likes certainty and had already factored in Prime Minister (PM) Theresa May’s Brexit approach.
A close result or a hung parliament would therefore likely result in a fall in FTSE 100 led by domestic demand sectors. Within the FTSE 100, sector moves could be geared to how the GBP performs – given 70% of FTSE 100 earnings are derived offshore. A Labour victory could have various implications, given its far greater fiscal spending plans and a likely softer Brexit approach.