Why Did Markets Not React To ‘Shock’ Election Result?

Unexpected election results usually create turmoil on currency and stock markets. Why has calm prevailed this time? 

Karen Kwok 15 June, 2017 | 2:40PM
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It is fair to say that few people predicted the outcome of last week’s snap election. Financial markets don’t usually like surprises. There were significant corrections in both currency and stock markets following similar ‘upsets’ last year, after the EU Referendum and US Presidential election.

But markets barely moved after the result of the general election – which ended not with the predicted Conservative landslide, but with a hung parliament.  Why have they been so quiet?

Prior to the EU Referendum, bookies were pricing in a 90% chance of the vote going ‘Remain’. Similar odds were given on the Democratic candidate Hillary Clinton beating Republican rival Donald Trump for the US presidency. Both were wrong. Following the Brexit vote sterling fell by more than 10% overnight and, initially 8.7% was wiped off the value of the FTSE 100.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
TM Stonehg Flm Opps C Acc1,819.00 GBP-0.16Rating

About Author

Karen Kwok

Karen Kwok  is a Reporter for Morningstar.co.uk