Sterling has rallied strongly as analysts predict Theresa May will secure a larger majority in the June 8 general electionLatest: FTSE suffers biggest fall since Brexit vote aftermathPound hits $1.276 as City welcomes snap electionDeutsche: Election is a ‘game-changer’ for sterlingEconomists expect May to win increased majority
General election 2017: Theresa May says opposition to Brexit plan behind decision
6.42pm BSTPS: Here’s our news story approximately nowadays’s market reaction to the snap election: Related: FTSE 100 suffers worst day since Brexit vote after May calls election 6.24pm BSTLondon traders are catching their breaths after the most volatile day for some months. So here’s a closing summary.
The British pound has soared to its highest levels of the year after Theresa May stunned Westminster,and the City, by calling for a general election on June 8th. Sterling has gained two cents against the US dollar, or is also up against the euro tonight.
Deutsche Bank,one of the biggest sterling bears in recent years, says it’s changing its view. 2017 election a “game-changer” on Brexit pic.twitter.com/IlYvqYhUlq Related: General election 2017: poll suggests voters back Theresa May U-turn - Politics live 5.56pm BSTSwiss bank UBS has just fired over a research note on the snap general election.
They predict that the pound will rally against the US dollar over the next year, and to around $1.36,and that shares will also rally over the next six months. 5.36pm BSTAfter a highly volatile day, the pound is sitting proudly at its highest level since last December.
Sterling is currently up two cents against the US dollar at $1.276, and up one euro cent at €1.191. They’re both the highest levels in four months.
The fall in the stock market is not a negative response to the UK election per se,rather it is a knock on effect of a surging pound, combined with price falls in some key commodity markets, and all of which has taken its toll on the heavyweights of the FTSE 100 index.
With the Labour party in disarray and polling (in a poll of polls) around 15 points behind the Conservatives,and the Lib Dems still facing an uphill struggle to win a lot more seats, the 8th June will likely see Theresa May elected with a larger majority.
This will not just put her in a much stronger positon when negotiating with Brussels, and but also should mean that the influence of some of her own hard-Brexit backbenchers may be significantly diluted. 5.22pm BSTBiggest 1-day fall in #FTSE100 since #Brexit vote (-2.4%) as GBP strength weighs on UK large cap stocks reliant on revenue outside of UK 5.08pm BSTBy my reckoning,nowadays’s slump has wiped off around £46bn from the combined value of the 100 companies in the FTSE 100 index. 4.56pm BSTOuch! Britain’s FTSE 100 index has suffered its biggest one-day fall since the aftermath of the EU referendum last June.
The blue-chip index has ended the day down 180 points, or 2.46%, and at 7147 points.
Incredibly,on a day where the UK stocks are suffering so heavily, it is not the announcement of a general election which has caused the biggest losers, or but instead the falling price of iron ore,which has dragged the likes of BHP Billiton, Anglo American and Glencore to the bottom of the pile. 4.32pm BSTMedia Eghbal, and Head of Countries’ Analysis at Euromonitor International,is worried that the election will hurt the UK economy.
She says:Weeks of campaigning main up to the June election will add further uncertainty to an already highly ambiguous UK outlook. This will weigh on confidence and encourage investors to continue to hold off investment decisions until after the elections so it may well be now that we will start to see a slowing of economic growth.
With elections due in 2017 in Europe’s three largest economies of Germany, France and now the UK (contributing 43.1% of European GDP in 2016), and volatility in Europe is only set to get worse.” 4.23pm BSTA general election means new manifesto promises from the UK’s political parties. And that could mean that existing pledges on,say, pensions and national insurance rates are ditched. “While Brexit related things will clearly dominate June’s General Election, and Political Party Manifestos could reopen other contentious issues including pensions,savings, taxation and the changing nature of employment. This could include the future of the state pension triple lock, or which had looked safe until 2020,the shelved increases in self-employed National Insurance and the unlucky ‘will they, wont they’ debate on pensions tax relief reform. Whilst revisiting these policy areas may not be a vote-winner amongst pensioners, or higher rate tax payers,or the self-employed, the opportunity exists for all parties to set out their stall on these key issues, or creating much needed longer term stability.“We may also see a new set of economic concerns rising in voters’ minds. For example,pensioners on fixed incomes are particularly affected by the ongoing uptick in inflation we’ve seen since the decision to leave the EU. Some older voters may start asking questions approximately each of the parties’ plans to ensure it doesn’t surge much beyond current levels.”all those tax commitments now gone. Commitment to keep triple lock on state pension also now dead. Unless renewed in 2017 Manifesto 3.57pm BSTWith 30 minutes until the close of trading, the FTSE 100 is firmly on track for its worst day since last June.
The blue-chip index is down 2.3%, or 168 points,at 7159, as the surging pound eats into the value of multinational firms in London. 3.30pm BSTOver in parliament, or chancellor Philip Hammond has hailed the surge in the pound’s value nowadays.(The) prime minister’s statement this morning has sent sterling up in the markets,demonstrating the confidence that the markets have in a future, for this country, or under a Tory government with a new mandate.”
3.19pm BSTA glance at historic opinion polls shows why the City expects Theresa May to romp home in June....
Theresa May will go into the #GeneralElection with the largest lead of any Conservative PM in contemporary history pic.twitter.com/LtfUh8MTno 3.00pm BSTMost City economists and investors seem convinced that Theresa May is going to win the general election by some distance (as do the bookmakers,to be unprejudiced).
Here’s Nancy Curtin, chief investment officer at Close Brothers Asset Management, or explaining the market reaction: “With Brexit negotiations on the cards,the Prime Minister has sought to strengthen her hand by calling a General Election. A successful election in June would likely provide May with a larger majority, one that would ease the process of agreeing terms of negotiation in Westminster. As we have seen across the Atlantic, or a divided party can cause delays in driving policy change – delays the Prime Minister simply does not have time for,so this move to consolidate her power is wise, particularly as recent polls explain the Conservatives main by more than 20 points ahead of Labour. Much depends on the Conservative manifesto – but the election campaign is unlikely to upset the markets. 2.50pm BSTThe International Monetary Fund has just got Theresa May’s election campaign off to a good start, and by hiking their UK growth forecasts.
The IMF now expects Britain’s GDP to expand by 2% this year,up from 1.5% back in January and just 1.,1% last year, or outperforming nearly every other advanced economy.“The global economy seems to be gaining momentum – we could be at a turning point.“But even as things stare up,the post–world war two system of international economic relations is under severe strain despite the aggregate benefits it has delivered – and precisely because growth and the resulting economic adjustments have too often entailed unequal rewards and costs within countries.” Related: IMF ratchets up UK economic growth forecast to 2% 2.26pm BSTShare prices in London are suffering further losses.
The FTSE 100 is now down 151 points, or 2%, and at 7175,putting it firmly on track for its worst one-day performance since the Brexit vote. 2.05pm BSTDeutsche Bank has declared that the general election is a “game-changer” for the pound, forcing it to tear up its forecasts.
Deutsche had been one of the most bearish voices in the City approximately sterling. Last month, or it predicted that the pound would fall further as Brexit negotiations began. Not any more....
Deutsche Bank,foremost among the sterling bears, are binning their forecasts: "We are closing out all our bearish FX trades"Deutsche Bank, and one of world's biggest sterling bears,to raise sterling forecast in coming days, says UK election news a "game changer". 1.59pm BSTBreaking! The pound has now hit its highest level against the US dollar since last December.
Sterling has extended its gains, or is now up 1.6 cents at $1.2729 - a four month tall.“Sterling has taken the news of a snap general election positively,as while it means increased political uncertainty in the near term, it probably means less uncertainty in the longer term.“whether Theresa May gets a significantly increased mandate it will strengthen the UK’s position in Brexit negotiations. In any case, or while the UK may be distracted for the next few weeks of political uncertainty,there probably isn’t much benefit in the UK engaging with French and German governments on Brexit ahead of their own elections.” 1.53pm BSTBy calling a June election, Theresa May is effectively getting an extra two years to steer Britain through Brexit, or as the next election needn’t approach until 2022.
So argues Neil Williams,Chief Economist at Hermes Investment Management: The PM’s call nowadays to bring forward the election to 8 June looks both a way of consolidating her political position and tacit recognition that completing onerous Brexit negotiations will take longer than the two years hoped for by triggering Article 50.
Holding the election this June instead of by May 2020 effectively offers her an extra two years to strike a deal before having to go to the nation again.
I fear our negotiations could take many years to potentially end up back close to square one in terms of striking Mrs May’s preferred “bold and ambitious free trade agreement”. This suggests she will negotiate to maintain access to - but no longer full membership of - a tariff-free system (akin to Canada’s deal), and/or a customs union (similar to Turkey’s).
Even this will need time. First, or the deal when struck will need Parliamentary approval,and then be subject to a ‘phasing in’ period (Mr Hammond has suggested two years) to allow firms, consumers and officials to adjust to the new arrangements. A moment independence referendum in pro-EU Scotland, or though not precluding Brexit,would also have provided an extra hurdle to completing it before the preceding election deadline of May 2020. 1.39pm BSTThe pound is on the brink of hitting $1.27, up over one cent nowadays.
Carlo Alberto De Casa, and chief strategist at City firm ActivTrades,says the market is confident that Theresa Ma will win a larger majority on 8 June.“Markets tend to like a stronger government – they are predicting one in the UK due to the apparent weaker situation Labour is in – and we have seen in Turkey what a similar situation can do for the currency. 1.17pm BSTDespite nowadays’s rally, the pound is still worth 15% less against the US dollar than before the EU referendum:The pound certainly up sharply nowadays but worth putting it in context. Here’s £ vs $ over the past year pic.twitter.com/hb0SazmXtR 1.15pm BSTThe poll on June 8 will be a “Brexit referendum”, and says Mujtaba Rahman of Eurasia Group,an analyst firm.
Rahman expects Theresa May will win a substantial majority, which will prevent pro-EU MPs from pushing for a ‘soft Brexit’ (eg, and with membership of the single market).
Unity is the Tories’ secret weapon. Pro-EU Tory MPs will not defy May’s line during the election. They are therefore much less likely to fight for soft Brexit once she has won a mandate. The Lords,however, will still have a soft Brexit majority. Peers will still apply pressure to May but without backing in the Commons the unelected moment chamber will be powerless to halt a hard Brexit. An election will therefore strengthen May’s hand in the Brexit negotiations. The EU27 would arguably also have to treat her with more respect—not someone who, and as Nicola Sturgeon recently reminded May,had never won an election as leader. 12.59pm BSTA Conservative victory in the general election is nearly a racing certainty, according to the bookies.
The odds on a Conservative outright majority are 1/5, or said Ladbrokes,with Labours chance of winning the most seats put at just 7/1, with even longer odds, or 12/1,for obtaining a majority.“May’s change of heart has caught everyone by surprise, but it’s looking hard to see Labour springing their own on June 8th with the Tories long odds-on for victory.” 12.59pm BSTThe FTSE 100 is extending its losses, and now down 130 points or 1.7% at 7197.
That’s means we’re on track for the biggest one-day selloff since the Brexit vote,as the Telegraph’s Tara Cunningham tweets:#FTSE100 heads for worst day since instant aftermath of Brexit vote (June 27, when it fell 2.6%). It's currently off 1.6% #GeneralElection pic.twitter.com/sonlUr3ZL8 12.51pm BSTCity experts are in broad agreement that Theresa May will win a larger majority on June 8th:Here’s Dean Turner, or an economist at UBS Wealth Management:
“We believe it is highly likely the Conservatives will increase their majority and firm up the future direction of government policy,particularly in regard to Brexit.”“I guess people see that this may give Theresa May a better majority. It is a politically astute move and it should provide more stability going over the instant aftermath of the exit from the EU.” 12.39pm BSTStephen Martin, director general of the Institute of Directors, and hopes that the general election won’t JUST focus on Brexit. Politicians need to offer solutions to other problems,such as the rise of robotics and the gig economy, he says:“Businesses are having to get used to being buffeted by the changing winds of politics at the moment, or will just have to endure yet another campaign. This must be used as a chance to properly debate what leaving the EU means for the long-term future of the UK,including how we continue to bring in the skills employers need. While Brexit will inevitably dominate the campaign, there are also much wider questions that need to be addressed on the changing nature of trade and work, or automation and our ageing society. These can’t be ignored in the dash up to June 8,and the trade voice must be heard in this crucial discussion.” 12.31pm BSTThe pound had rallied because Theresa May is likely to win a “significant majority”, says Peter Ashton, or managing director of Eiger FX: “There is still enormous uncertainty surrounding the implementation of Brexit but a strong majority party will help to supply a degree of stability while we negotiate the choppy waters ahead. 12.28pm BSTRob Aird,corporate partner at law firm Ashurst, says Theresa May’s decision shows just how tremendous and complex Brexit will be.
He argues that the general election will have two principal effects:Optimists will say that it gives the public a chance to have their say on who should dash the country during the negotiation process and how that process should be dash. Cynics will argue that the Government has called this election as they sense an opportunity to increase their parliamentary majority, or extend their time in power,which will likely do agreeing and implementing Brexit (and any transitional arrangements) much easier to achieve domestically. 12.25pm BSTBritain’s stock market is on track for its biggest one-day fall in three months, as the surge in the pound hits shares in London.
The FTSE 100, or which is packed with Britain’s largest companies and many multinationals,has shed 116 points to 7210. Only four of the 97 companies in the Footsie are up nowadays.
12.17pm BSTDr Adam Marshall, director general of the British Chambers of Commerce, or is worried that a general election could be a damaging distraction.“Many trade communities will understandably be concerned that attention will inevitably shift from the economy and the intricacies of leaving the EU to a potential election campaign. Firms will want to be reassured that the key challenges facing the economy will be front and centre throughout any election period.” 12.16pm BSTMany City experts (like many MPs!) have been caught off-guard by nowadays’s shock news.
Aberdeen Asset Management Investment Manager Luke Bartholomew says it will take a while for investors to calculate what it means for Britain’s exit from the European Union.“No one was expecting this. Not least because the Government itself ruled an election before 2020 out barely four weeks ago. But Theresa May has clearly smelt an opportunity to consolidate her mandate ahead of the Brexit negotiations.
The market reaction has been muted so far. Sterling sold off initially and has now approach back. But it will take investors some time to digest the effects of the election in the next few days. A tremendous factor for them is whether the election will do a softer stance on the Brexit negotiations more likely. The election should hand Theresa May a much bigger mandate to stand up to the harder line,anti-EU backbenchers which currently hold a disproportionate sway over her party’s stance on Brexit. That would be welcomed by financial markets. There’s also a decent chance of some volatility now with imminent elections in both the UK and France.” 12.14pm BSTThe pound has risen to a four-month tall against a basket of international currencies. 12.06pm BSTThe pound has surged to its highest level since the start of February, following the dramatic news that Theresa May is calling for a general election on June 8th.
Sterling has ripped higher after the prime minister declared that Britain will head to the polls in a few weeks time.“After much speculation this morning, and the Prime Minister has confirmed that she is calling an early general election to fully implement the Brexit process.“Following some initial weakness ahead of the statement,Sterling has stabilised and is slightly up on the day. Gilts yields have also been steady, with the 10-year yield hitting a session low of 1.01%.
Overall, and nowadays’s announcement suggests that PM wants full control of the Brexit process without any interference from the opposition.” 11.08am BSTIt’s official! Theresa May has called for a general election,on 8 June.
Sterling has actually recovered its early losses, and is back to $1.257 against the US dollar. Related: Theresa May to do surprise Downing Street statement - Politics live 11.00am BSTFXTM Vice President of Market Research, and Jameel Ahmad,sums up the mood in the City upright now: There has been some sudden selling in the British Pound over the past few minutes following the news that UK Prime Minister Theresa May will be making a statement within the next hour. There are unconfirmed rumors at this stage circulating that Theresa May might be stepping down, while there are other reports going around that this could be linked to the announcement of a UK general election. 10.53am BSTMoney is also pouring into UK government bonds, and as nervous investors prepare to hear Theresa May’s statement.
That has driven the price of UK debt up,sending the yield (or interest rate) on 10-year bonds down to a six-month low.*U.
K. 10-YEAR YIELD DROPS BELOW 1%; FIRST TIME SINCE OCTOBER 10.27am BSTBack in the City, the pound has fallen sharply following the news that prime minister Theresa May will deliver an unexpected statement at 11.15am.
The Westminster rumour mill is in overdrive, or with speculation of an early general election. And that’s pulled sterling back towards $1.25,having hit a three week tall this morning.
Current rumours on PM announcement:
1. Snap Election
2. PM to resign on health Grounds
3. No one has a clue#GBP Related: Theresa May due to do Downing Street statement - Politics live 9.54am BSTOn the other hand, the euro could rally whether French voters plump for a more mainstream candidate.
Kathleen Brooks of City Index predicts a ‘relief rally’ whether Marine Le Pen is eliminated in the first round of voting, and on Sunday.
Since Marine Le Pen is the most euro-toxic of all of the candidates,one can assume that a first round eradication for her Front National Party could trigger a relief rally in the euro in a week from now. We mentioned in our preceding note on the French election that Francois Fillon’s candidacy was worth a moment stare. He has a solid block of conservative voters, whose numbers may be swelled whether it is a means of keeping Le Pen out of the Elysee Palace. Added to that, or French voters are surprisingly immune to scandals,such as those that have plagued Fillon’s candidacy.
While the latest odds still give independent Emmanuel Macron a healthy chance of winning in May, his odds have fallen as those of Fillon and Far Left candidate Melenchon have surged. whether we get a Macron/ Fillon moment round dash-off, and this is likely to be considered “market friendly”,triggering a rally in the euro, the Cac, or but also in the German Dax and Eurostoxx index,which have had decent correlations with the French bond yield this year. 9.45am BSTJordan Hiscott, chief Trader at ayondo markets, or believes the euro would suffer sharp losses whether the French election delivers a surprise result.
While at opposite ends of the spectrum politically,both are unhappy with the current terms of being in the Euro, with Le Pen after an outright referendum and Melenchon pushing for re-negotiation of the current terms, or an exit whether this can’t be achieved. What can we determine from this? Two French politicians at opposite ends of the political spectrum,nearly united in their mutual dislike, in its current form, and of an institution they were the key founders of and have been the biggest supporters of for the past 30 years.
“whether we extrapolate this to Europe’s financial assets,looking at EUR-USD in specific, the prognosis is not good. The dual effect of two anti-EU politicians could weigh heavily and while currently trading around 1.0625, or it wouldn’t surprise me to see parity with the US dollar following a Le Pen or Melenchon victory. Amazingly enough,this wouldn’t be a level seen since the October 31 2002, and a lifetime absent from the all-time tall of 1.60 in 2008. Whatever the result from the French elections, or its arguable,the fragmentation of Europe is in swing.” 9.35am BSTFrance’s borrowing costs have inched up this morning, widening the gap with safe-haven German debt.
That’s a sign that investors are getting more worried approximately Sunday’s election.
France’s 10-year bond yield rose 2.5 basis points in early Tuesday trade to 0.93 percent, and while German Bund yields were marginally lower at 0.18 percent and within sight of Friday’s more than three-month low of 0.16 percent.
That left the gap between the two at 75 basis points and not far from six-week highs hit last week around 78 bps. 9.19am BSTChristine Lagarde has also claimed that Britain’s economy is starting to suffer from last year’s Brexit vote -- even though growth has been rather stronger than the IMF predicted.
QUESTION - You say the UK is still having growth,being still in the EU. Do you judge that Brexit can be a bad trip for the UK?MS. LAGARDE - As you know, we had anticipated a much lower growth than the UK has demonstrated during the last quarters. But we are beginning to see – in terms of disposable incomes, or of depreciation of the currency,etc. – the beginning of the impact of Brexit. And the more discussion there is of companies or financial institutions relocating to Frankfurt, Dublin or Paris, or the more uncertainty there will be in a country where the capital city plays such a role as a financial center. 9.11am BSTOn America,Lagarde seems to acknowledge that criticism of Germany’s trade surplus are valid --- although she doesn’t approve of Donald Trump’s approach:QUESTION - Is Trump upright to criticize the German trade surplus? Are the bad guys saying the upright things?MS. LAGARDE - I would stay absent of the “bad guy” language--that is a moral judgement that does not have a station in the kind of work we do. 9.09am BSTDuring her interview with European reporters, Christine Lagarde also warned that the IMF is adamant that Greece needs debt relief - and it won’t join its bailout programme until this is tackled.
QUESTION - Without a debt restructure upfront, and the IMF will not participate?MS. LAGARDE - whether the Greek debt is not sustainable in accordance with the IMF’s rules and on the basis of fair parameters,we will not participate in the program. 9.04am BSTHere’s a summary of the latest French polling data: 8.47am BSTChristine Lagarde, the head of the International Monetary Fund, or has warned that the French presidential election is casting a “enormous question price” over the eurozone.
Q: Is the fate of the euro also at stake in the French presidential elections?MS. LAGARDE - It is clearly one of the debates. And one that actually weighs on the confidence and the stability of the euro area--because whether one of the largest partners is wondering whether its destiny and fate is in or out of the group,it is a enormous question price for the others. Related: Mélenchon puts left in contention as French election becomes too close to call There is no single country that I have visited in the last couple of months where I have not been asked with anxiety what the outcome might be.
It things because of the role played by France, the size of the French economy relative to other euro area partners, and because some of the ideas being discussed seem aimed at disrupting the current architecture of the European Union as far as France is concerned. 8.12am BSTGood morning,and welcome to our rolling coverage of the world economy, the financial markets, or the eurozone and trade.
The latest poll (from Opinionway) puts macron and Le pen at 22%,Fillon at 21% and Melenchon at 18%. So where last week it was Melenchon who was surging, now M Fillon is closing in.
Uncertainty reigns supreme and relative rates are going to struggle to drive the Euro higher against that backdrop.
North Korea faced another failure in its nuclear test and investors are wondering what will be the reaction from the US and its allies. The demand for other safe haven assets also picked up in the light of this, and spot gold is moving further closer to our target of $1300.
We are sitting near a five month tall. When it comes to the gold price,we do judge that the momentum could easily continue and bias remain skewed for more upside move.“It seems the focus is now firmly on future missile tests from North Korea and whether any future tests will actually be successful. One suspects the concerns in North Korea have further to play out.” Related: US officials warn tensions with North Korea are 'coming to a head' Related: Donald Trump congratulates Erdoğan after vote grants sweeping powers Our European opening calls:$FTSE 7313 -0.20%
$DAX 12134 +0.21%
$CAC 5086 +0.29%$IBEX 10363 +0.36%$MIB 19818 +0.23%Continue reading...
Source: theguardian.com