United Kingdom stock futures slide on hung parliament
- Author: Zachary Reyes Jun 13, 2017,
Jun 13, 2017, 2:22
Since the Brexit vote, weaker sterling has boosted demand for shares in firms which earn the bulk of their revenues in dollars and euros.
Sterling fell as much as 2.4 percent before recovering some of its losses.
"We could be heading for a period of market uncertainty, which will be compounded by the elephant in the room this time around - the forthcoming Brexit negotiations", said Michael Judge, head of corporate dealing at broker OFX.
Fortunately, the fall hasn't been as spectacular as that seen when the government misjudged voters feelings over the Brexit last June, but traders were caught off guard somewhat as most had expected a landslide victory for the Conservative Party.
Throughout the night the hung parliament became clear as the Conservative party failed to win a majority of seats. If hopes for a "soft Brexit" are in fact the main takeaway, the anti-risk Japanese Yen be pressured and the Euro might find a bit of support.
The probability of a clean divorce from the European Union, a so-called "hard Brexit", can play out in different ways.
"The failure to secure political stability - and the outcome of a hung parliament - was always going to be the pound's nightmare scenario", said ING currency strategist Viraj Patel, in London.
The euro also pushed higher against the dollar, with EUR/USD rising 0.2% to 1.1217.
Italian bond yields fell again on Friday as the head of the country's ruling Democratic Party, Matteo Renzi, said he was pessimistic over the chances of reaching a new cross-party pact on a reform of the electoral law.
The past year has seen plenty of surprises in Western politics following presidential victories for Donald Trump and Emmanuel Macron in the United States and France respectively, while it is nearly 12 months since Britain voted in favour of exiting the European Union.
The Dow rose 0.04 percent, while the S&P 500 gained 0.03 per cent and the Nasdaq Composite 0.39 percent.
Overnight, Wall Street had seemingly judged the testimony of former Federal Bureau of Investigation director James Comey was not life-threatening to the administration of President Donald Trump.
Of the United Kingdom stocks on the pan-European benchmark, property developer Berkeley Group Holdings PLC BKG, -4.02% suffered a 4.3% loss, Metro Bank PLC MTRO, -4.38% fell 4%, and retailer Next PLC NXT, -2.48% moved 3.3% lower.
Comey accused Trump of firing him to try to undermine the investigation into possible collusion by his campaign team with Russia's alleged efforts to influence the 2016 election.
"So it´s not particularly impactful for thinking about Trump´s economic agenda to go through".
Having stabilized late on Friday and in Asian trading today, the pound resumed its downtrend at the start of European trading amid fresh uncertainty about Brexit as well as about the durability of Theresa May's premiership. Gold prices were last flat on the day at $1266 an ounce.