Huitong Financial App News-- Britain is less than six weeks away from the general election.DavidwilliamspokerOpinion polls suggest that the centre-left Labour Party is likely to return to power in 14 years' time. Analysts say the British stock market will react positively to the result, while the pound is more focused on inflation and interest rate policy.
In a report analyzing stock market movements since 1979, Citigroup said that historically, British stock markets were "relatively flat or falling" in the six months after the election (the study ruled out "volatile financial conditions" caused by the bursting of the dotcom bubble and the big financial crisis).
Six months after Labour's victory, the MSCI index of UK large and medium-sized stocks rose about 6 per cent, while six months after the Conservative victory, the index fell about 5 per cent, according to Citi.
Citi also said the more domestically oriented FTSE 250 index tends to outperform the FTSE 100 index, which will do better after Labour wins. Citi also found that defensive and financial stocks tend to perform better after the election, while energy and financial stocks both perform well.
According to Capital Economics, the UK stock market has fallen five times during the past Labour government.
However, John Higgins, chief market economist at the consulting firm, says he blames it all on Labour's dishonesty at the time. He said in a report that these crises occurred during the Great Depression of the 1930s, the postwar 1940s, the aftermath of oil market shocks in the early 1970s, the bursting of the dotcom bubble in 2000 and the financial crisis.
Higgins also pointed out that the relative performance of the UK stock market since the Conservative Party came to power in 2010 has been "generally not impressive".
John Higgins, chief market economist at Capital Macro, says the past Labour government has experienced five plunges in sterling in the past century, but broader factors are at work again. Three of them can be attributed to the "unsustainability of the fixed exchange rate system" from the 1930s to the 1970s, one to the great financial crisis and the last to the debt crisis of 1976, he said.
Analysts expect no fiscal disagreement between the two parties, which means the outlook for sterling and gilts will still be more tied to the outlook for interest rates.
Joe Tuckey, head of foreign exchange analysis at Argentex Group, said: "the reaction in the foreign exchange market is strongest when there is a lot of uncertainty in the general election. This does not apply to the current situation, if history is a guideDavidwilliamspokerWe should expect the pound to rise moderately in the coming weeks, with little reaction to the election result itself. "
Tuckey said this was before the victory of New Labour in 1997, when the pound rose only 2% in the weeks before the vote.Davidwilliamspoker.5%. In many ways, the pound will refocus on inflation and the Bank of England's interest rate policy, which may be more decisive on price movements than the election results.
Daily chart of the pound against the dollar 9:00 on May 27th, Beijing time, the pound traded at 1 against the dollar.Davidwilliamspoker. 2738/39