Uncertainty persists as the focus shifts back to the bigger Brexit picture.
Markets show little change following Theresa May vote
The political events of yesterday felt like a side story episode of a political drama which ultimately has little effect on the grander storyline. The financial markets had been gearing up for the vote since Wednesday morning with the pound being the ultimate barometer of sentiment, while the UK stock market now seems more focussed on global events. As the day progressed, with more conservative MP’s pledging their allegiance to the Theresa May, the pound steadily rallied and took the initial news of her victory well, but the size of her majority did result in sterling to backtrack a little.
Overall this episode had little impact on the stock market and sterling which is still trading near 18 month lows. The focus is now on the bigger picture and markets may take a little encouragement that the cataclysmic “no deal” scenario is looking a little more distant. However, the Europeans have been consistent in saying there will be no amendments and so markets will be for now pricing in the probability that whatever deal Theresa May brings back, will still get rejected.
For the time being, uncertainty will persist, businesses will still hold off making investment decisions and market’s worries will not be helped by the wider global economic conditions and political rhetoric. These provide opportunities for traders who thrive off volatility, but investors would understandably hold off putting more money into the markets. However we believe those already invested in the market, staying put may well be the best course of action.
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