7 May 2015
UK elections: Labour victory to be mild negative for markets – BBH
FXStreet (Barcelona) - The Brown Brothers Harriman Team comments on the betting market sentiments surrounding the UK elections and further believes that a Labour victory will likely only be mild negative for the market.
Key Quotes
“The first exit polls for the UK election are expected to start coming out at 22:00 GMT. We think that a clear picture of the voting outcome will emerge around 4:00-5:00 GMT on Friday.”
“Most projections still give a minority Labour government the highest odds. For example, odds implied by Betfair suggest a 36.4% chance of a Labour minority government. This would require the support of the SNP, either explicitly in a coalition (contradicting campaign pledges) or implicitly (for example via a Labour-LibDem coalition with support of the SNP in votes of confidence).”
“A Labour victory would probably be a mild negative for markets. Investors are already prepared for a hung parliament and know that Labour has a good chance of leading the new government, so it’s not a major surprise.”
“Moreover, a more pro-growth approach could prove to be positive in the medium-term and taking the EU referendum off the table kills one major tail risk for the pound.”
“In contrast, Betfair puts the odds of a Conservative-LibDem coalition government at 25.6%. Many observers believe that 290 is the magic number, meaning that is what they would need to secure a coalition majority (323 seats). This would be a highly unlikely outcome according to the latest polls, though it would be clearly the most favorable one for markets.”
Key Quotes
“The first exit polls for the UK election are expected to start coming out at 22:00 GMT. We think that a clear picture of the voting outcome will emerge around 4:00-5:00 GMT on Friday.”
“Most projections still give a minority Labour government the highest odds. For example, odds implied by Betfair suggest a 36.4% chance of a Labour minority government. This would require the support of the SNP, either explicitly in a coalition (contradicting campaign pledges) or implicitly (for example via a Labour-LibDem coalition with support of the SNP in votes of confidence).”
“A Labour victory would probably be a mild negative for markets. Investors are already prepared for a hung parliament and know that Labour has a good chance of leading the new government, so it’s not a major surprise.”
“Moreover, a more pro-growth approach could prove to be positive in the medium-term and taking the EU referendum off the table kills one major tail risk for the pound.”
“In contrast, Betfair puts the odds of a Conservative-LibDem coalition government at 25.6%. Many observers believe that 290 is the magic number, meaning that is what they would need to secure a coalition majority (323 seats). This would be a highly unlikely outcome according to the latest polls, though it would be clearly the most favorable one for markets.”