London stocks slide as Britons head to polls

May 7, 2015
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British flag Big Ben London/AFP
British flag Big Ben London/AFP

, LONDON, May 7- The London stock market sank Thursday as Britons voted in a general election that is shrouded in uncertainty and is set to be the closest in a generation.

The capital’s FTSE 100 index of leading companies slumped 0.82 percent to 6,877.22 points in afternoon deals. 

In the eurozone, Frankfurt’s DAX 30 index slipped 0.05 percent to 11,344.84 points and the Paris CAC 40 lost 0.50 percent to 4,956.71 compared with Wednesday’s close, with jitters over the Greek debt crisis also driving down stocks.

Madrid stocks lost 0.60 percent, although Spain enjoyed negative interest rates on its medium-term debt for the first time since a crippling economic crisis.

The situation in Europe is “awash with negativity, from bond sell-offs to election uncertainty and the perpetual Greek migraine,” said Connon Campbell, Spreadex financial analyst.

“It is hard to ignore the (British) election’s impact on the FTSE,” Campbell said, adding: “When placed in context the FTSE’s current losses become even more remarkable; in nine out of the last 11 election days the UK index has risen.”

In Britain, polls opened at 7:00 am (0600 GMT) with voters deciding between Prime Minister David Cameron’s centre right Conservatives and Ed Miliband’s centre left Labour.

“Judging from recent opinion polls, today’s general election is likely to be the closest for at least a generation,” said analyst Nick Stamenkovic at RIA Capital Markets.

“Conservatives and the Labour party are neck and neck with neither party likely to achieve an overall majority.”

While the leaders of both main parties insist they can win a clear majority in the 650-seat House of Commons, they will almost certainly have to work with smaller parties to form a new government.

If neither the Conservatives nor Labour win a clear majority, they will start days and possibly weeks of negotiations to try to build a bloc of about 326 seats.

 

– Dead heat in polls –

 

The last three polls released on Wednesday showed a dead heat between the two main parties, tied at 34 percent, 35 percent and 31.4 percent.

Analyst Mike van Dulken at trading firm Accendo Markets said the election was “a cause for concern, as markets hazard guesses as to what kind of coalition we will inevitably end up with, how complicated it will be and how long it will take to put together”.

In foreign exchange deals in London, the pound sank on election jitters to $1.5216 from $1.5247.

“You do not need a particularly long memory to recall the pound’s nosedive after the 2010 election, when it took the Conservatives and Liberal Democrats an agonising five days to form the coalition government,” said Currencies Direct analyst Phil McHugh.

 

– Days of uncertainty? –

 

“Political uncertainty is never good news for a currency, and with more minority parties at the negotiating table this year we should be bracing ourselves for more than five days of uncertainty,” added McHugh.

“The poll result — or lack of one — should be known early Friday morning.”

The European single currency meanwhile slipped to $1.1279 from $1.1348 late in New York on Wednesday.

Wall Street stocks dipped in opening trade Thursday as the market looked ahead to the April US jobs report.

Five minutes into trade, the Dow Jones Industrial Average was down 0.20 percent at 17,806.75 points.

The broad based S&P 500 lost 0.16 percent to 2,076.84 points, while the tech rich Nasdaq Composite Index slipped 0.05 percent to 4,917.04.

Asian shares fell Thursday after Wall Street on Wednesday dropped on weaker than expected US economic data and a warning from Federal Reserve Chair Janet Yellen that stock valuations were “quite high”.

Tokyo stocks fell 1.23 percent after a three day holiday, Sydney fell for the third straight day, and mainland Chinese markets were also lower on worries regulators may tighten control over margin trading.

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