On 18th April 2017 Theresa May announced that she wanted to hold a snap General Election. Recent political events have all had one thing in common…a surprising outcome. The UK is waking up this morning to a hung parliament where no single party can get enough MPs to form a majority government.
Why was a snap election called?
Theresa May was tempted to capitalise on her healthy poll ratings and go to the country, with one of her main reasons behind doing so being to strengthen her hand in Brexit negotiations, with official Brexit talks with the EU due to start in mid-June.
What has happened?
Labour has done better than expected and although the Conservatives are the biggest party, they have fallen short of the 326 seats needed for a majority to form a government. It looks increasingly likely that Theresa May will remain as Prime Minister and look to form a Coalition Government with the DUP in Northern Ireland.
How have markets reacted?
It was predicted that the outcome of a hung parliament would have a large negative effect on currency, with Sterling seeing sharp declines against the Dollar and Euro with increased uncertainty about the path of Brexit negotiations.
However in reality this has not materialised; and whilst currency did see a small decline of around 1.5% for the Pound vs the Dollar and 1% for the Pound versus the Euro, this is not as bad as predicted, and as the day progresses this is stabilising.
The FTSE 100 opened up by 1% this morning as a result of weakened Sterling and is still trading at or around its record highs of 7,500 points. This all means that markets have remained stable and the hung parliament at this early stage has not generated much volatility, this could of course change.
For those who are currently invested, our message remains the same, keep focused on your long term plan and stay invested. Good growth opportunities still exist, and in fact there are risks in not being invested with few appealing alternatives and interest rates remaining at historic lows.
Heightened political uncertainty means maintaining a well-diversified portfolio is as important now as it ever has been, we are committed to making sure our clients’ portfolios hold sufficiently diverse assets to make the most of current market conditions. This will mitigate some of the risks that tend to be drawn out from events such as yesterday’s election.
To discuss your financial future, please email me – firstname.lastname@example.org or call 01484 608095