Investment UK news update on elections

The Greek debt crisis and the UK’s reality of a hung parliament are dominant worries for investors. The two predominated investor sentiment as the election was concluded with no clear majority winner. As a result, the FTSE plunged on Friday afternoon trading.  London’s leading share index had a fall of 2.78% as it reacted to news of the election and continuing debt crisis in Greece. The index declined from an earlier trading at 3%. Investors’ fears of the consequences of the Greek debt crisis took center stage as reports showed that the UK and Greek bond markets were the only ones experiencing a sharp decline in Europe. That was coupled by the ensuing political uncertainty that had the pound decline at a low of $1.45 against the euro. It as well, continued to perform poorly against the dollar, falling 0.85% to 1.466%.

 

Investor confidence has however been eased by the expected alliance between the Tories and the Conservatives. If it is successful, David Cameron, the Conservative party leader is expected to form a strong and stable government. Investors were as well shaken after the Dow Jones fell by 1000 index points due to a mistake by a trader on data entry. Employment figures released shows an up of 290,000 new jobs per month recording the highest in the last four years. Mean while, as the markets took a negative reaction to the Greek fallout, Bond manager’s fears for gilts and sterling continues.

 

Gilts went up initially at the expectation that the Tories might win but soon reversed pretty soon. The market as a whole harbors fears over how long the political uncertainty will last but individual investor gilts were not badly off.  Economists and various analysts predict the political uncertainty means that all asset classes will have to worry. Possible sovereign debt faults in the euro zone are a great worry to investors in the United Kingdom as well. The dislocated UK financial markets have provided investors opportunities for arbitrage and short selling from these worries.

 

The effects of the fastly spreading debt crisis are increasingly becoming visible in the UK’s financial markets. Investors feel that the lifting of supportive measures by the ECB will worsen the situation. Debt costs surged to fresh highs across the eurozone after the ECB had ruled out using its “nuclear option” to stabilize the bond markets. That marked the deepening of the Greek crisis that is threatening the European markets and investor confidence.

 

08 May 2010