Thursday, Apr 22, 2010
Brown, Cameron, Clegg - Does it matter?
Motley Fool: Why The Election Means Nothing To The Markets
The FTSE 100 doesn't care who wins on May 6.
The instant the election date was confirmed, the financial press exploded with articles looking at its likely impact on stock markets. Do markets vote Labour, or Conservative? Do they dread hung parliaments? What do they really think of Nick Clegg?
Posted by alan_540 @ 09:16 AM (616 views) Add Comment
5 Comments
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1. drewster said...
The author is talking about the stock market. What about the bond markets though? George Osborne says we should vote Conservative because if we don't, the bond markets will take a dislike to gilts. Regardless of whether that's true, it's a terrible indictment of the election campaigns. We're being asked to vote not on policies, but on the unquantifiable threat of a gilt-buyers strike.
2. Wageslavex14 said...
I disagree. Government intervention in the markets is playing a much bigger role than ever before, which is what makes it impossible to make any sensible long term decisions. If goverments stopped printing money and back-stopping the banks, there would be far less money in stock, bond and housing markets and prices would fall back quickly.
Without government intervention we would have deflation. With irresponsible government intervention we will get runaway inflation. I would clearly prefer the former, but depending on the outcome of the election we may get the latter. That's why this election matters to the markets.
3. uncle tom said...
Drewster,
I agree with you, 'The markets' is not just the FTSE..
..but then, have you noticed how The Motley Fool has gone down the pan over the last couple of years?
It used to be quite insightful, and interesting to read; but now it's descended to junk journalism, and most of its pieces are now just re-hashes of what has been published elsewhere.
Will the FTSE react to the election outcome? Yes, to a degree, as will every other major stock market. The British economy is still big enough to matter, globally; and we have a massive structural deficit to deal with.
How will they react? An outright win for any party will be seen in a positive light, although there would be doubts about the resolve of either a Labour or Libdem admin to get the deficit under control.
A Tory admin that needed help from Ulster MP's to get a majority would not unduly bother the stock markets, and the reaction would be fairly neutral if Labour could form an admin with the help of the SNP..
..but a fully hung parliament would cause serious jitters - such an outcome is without recent precedent, and the markets really hate uncertainty..
4. drewster said...
Uncle Tom,
Yes agreed, TMF ain't what it used to be. Or maybe it's good for beginners, but we've learned so much that it's no longer useful?
5. Encdove said...
The election means nothing to the electorate.