ETFs
UK ETFs boosted after Labour landslide victory
ETFs tracking British stocks rebounded on the morning of July 5 after Labour won a landslide election victory over the Conservatives.
The FTSE 100 index was up 0.45% in early trading before falling, while the FTSE 250 was up 1.2% at 9:28am as markets reacted to news of a first Labour government in 14 years.
THE iShares MSCI UK Small Cap UCITS ETF (CUKS) rose 1.8%, followed by the iShares FTSE 250 UCITS Exchange Traded Fund (MIDD) rose 1.1% as investors became more confident in the UK’s future prospects.
The largest UK stock ETF, worth £11.7bn iShares Core FTSE 100 UCITS Exchange Traded Fund was up 0.26%.
It comes as Sir Kier Starmer’s Labour victory was already largely priced into markets, with the FTSE 100 up 7% year-to-date, with sterling also little changed on the news.
Susannah Streeter, head of financial markets at Hargreaves Lansdown, said: “This is a landslide victory for Labour that brings in a new political guard who have vowed to deliver big changes to the UK economy, but given polling forecasts the result has had little impact on financial markets.
“The FTSE 100 was in positive territory in early trade and sterling was broadly unchanged against the dollar as exit polls came in and edged higher only slightly as the headline result became clear, hovering around $1.276.”
Investors are hoping the outcome will usher in a new era of financial stability for the U.K., which became Europe’s most valuable market for the first time in nearly two years last month as France enters a period of political uncertainty.
Some might rise to the occasion at the thought of this victory, knowing that the party only needs to marginally increase its vote share to secure a historic victory.
Lindsay James, investment strategist at Quilter Investors, said: “The financial market reaction so far has been fairly muted, with sterling holding onto its recent gains overnight.
“Businesses and investors have been anticipating this outcome for some time and have been happy with the messaging coming out of Labour. He will not want to upset the game, although now that he is in power it will be interesting to see how far he deviates from reality.”