Judul : Here’s how the City of London is reacting to Theresa May’s shock failure to win a majority
link : Here’s how the City of London is reacting to Theresa May’s shock failure to win a majority
Here’s how the City of London is reacting to Theresa May’s shock failure to win a majority
Reuters/Clodagh Kilcoyne
This chap’s face says it all really.
LONDON — Thursday night’s general election result, in which the Conservative Party failed to win a widely expected majority in the House of Commons, has sent ripples across the political and financial spectrum.
The City of London, which had widely been preparing for a Tory majority, was shocked by the result, with the pound dropping sharply as an exit poll showed that the party would fall short.
Away from the pound, market reaction has so far been reasonably muted, with the FTSE 100 actually opening a little higher and safe haven assets like gold little moved.
However, the election will understandably be all that anyone in the City is talking about on Friday, with analysts, strategists and traders all sharing their opinions about what the result could possibly mean for the markets, as well as the UK’s broader economy.
Business Insider has rounded up some of the best reactions so far. Check them out below:
Kallum Pickering, economist at Berenberg
The early speculation is that the Conservatives and the pro-Brexit DUP (Democratic Union Party – N. Ireland) could enter a coalition.
But with 329 seats between them, the working majority would be very slim. No doubt there will be speculation of another Conservative-Lib Dem government. But the Lib Dems want another referendum on Europe. That would be a tough sell for the Eurosceptics in the Conservative Party.
Dean Turner, economist at UBS Wealth Management
“Markets were not primed for the prospect of uncertainty today. The dramatic change to the political and economic status quo will be unsettling to investors.
“The purest way of playing macro-political risk is through sterling, and we may see a good deal of the markets’ worries played out through currency. The short-term outlook points to higher volatility. In the first instance, it is likely that the pound will give up the bulk of its post-election announcement gains.”
Lee Hardman, currency analyst at Mitsubishi UFJ Financial Group
“The consensus that this election was all about consolidating Theresa May’s leadership is now shattered. Market hopes were pinned firmly on a stronger mandate as the UK government begins Brexit negotiations. Without question, there is volatility ahead. The market is desperate for any indication of what a Brexit deal might look like.”
Mike van Dulken, head of research at Accendo Markets
“As it stands, this could go down as one of the most impressive political backfires in UK history. After Brexit, of course.
“From a position of apparent strength less than six weeks ago, it looks very likely that PM May will see her parliamentary majority erased. A Conservative loss of outright power would surely call into question her own position as Tory leader after less than a year. Strong and stable leadership? Not recently, with a series of policy faux-pas and embarrassing U-turns. The question now is whether she will still be leading the ship when the UK begins its looming Brexit negotiations.
“A hung parliament was the most extreme scenario forecast; a Labour win was never on the cards. Once again, however, markets have been surprised by how voters cast their ballot. But the market reaction thus far has been remarkably sanguine. Panic it is not. Although uncertainty is once again rife.”
Samuel Tombs, chief UK economist at Pantheon Macroeconomics
“Britain’s inconclusive election means it is a question of when, not if, the country heads to the polls again in the near future. As the largest party, the Conservatives now have the right to attempt to form a new government. An alliance with the Democratic Unionist Party—a Northern Irish Right-leaning party which has won 10 seats—would give them a slender majority.
“But it is doubtful such an agreement would last long, given the tendency for Governments to lose seats in by-elections. The DUP also likely will have red lines on Brexit, given Northern Ireland’s close economic ties with the Republic of Ireland, which may be too much for Eurosceptic Tory MPs to stomach.”
John Wraith and team at UBS
“A hung parliament increases domestic uncertainty and clearly complicates the UK’s position at the upcoming EU negotiations. In the near term, the market may reflect this via a weaker pound, but we would caution against chasing cable lower from here.
“Today’s result will in part be seen as a vote against a definitive break from the EU, and the market may soon begin to reassess the probability of a so called hard Brexit. A Tory minority may have to make concessions in the direction of a softer exit (which the other EU countries may also be willing to accommodate, for example via a more generous transitional period than otherwise).”
Sam Hill and Peter Schaffrik, RBC Capital Markets
“We can’t speculate on how political developments will unfold, but both regarding the outlook for Brexit and other important government policies, a higher probability will have to be attached to a change in leadership of the Conservative Party than was the case before the election.”
Carolyn Fairbairn, Director General of the Confederation of British Industry
“This is a serious moment for the UK economy. The priority must be for politicians to get their house in order and form a functioning government, reassure the markets and protect our resilient economy.
“Politicians must act responsibly, putting the interests of the country first and showing the world that the UK remains a safe destination for business. It’s time to put the economy back to the top of the agenda.
“For the next Government, the need and opportunity to deliver an open, competitive and fair post-Brexit economy that works for everyone across all our nations and regions has never been more important.
“This can only be achieved if the next government doesn’t put the brakes on business, remains open to the world and sets out a pro-enterprise vision.”
Jameel Ahmad, FXTM vice president of market research
“From a market perspective, a hung parliament is seen as one of the worst possible outcomes to this election because it just injects further uncertainty into the United Kingdom as it heads into Brexit negotiations with the European Union.
“The whole reason for the unexpected announcement of a snap election from Theresa May was to gain a more dominant hand when representing the UK in negotiations, but this outcome would suggest it has backfired and ultimately will result in the door being opened even wider when it comes to the UK entering further political uncertainty.”
Dominic Rossi, global chief investment officer at Fidelity International
“This is the result markets feared. Markets were wrongly positioned, and international confidence in the UK will suffer. Sterling is the first casualty. With the election announcement, it rallied from the low 1.20s to the high 1.20s against the dollar. We can expect it to retrace these steps, with the overnight move lower to 1.27 an initial move.
“The uncertainty will put a lid on the UK equity market. The prospect of another election within next few months, coupled with the Brexit negotiations which are more unpredictable than before, raises the risks for all investors in UK equities.”
Read more stories on Business Insider, Malaysian edition of the world’s fastest-growing business and technology news website.
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