UK elections may favour equity

Financial markets/economy

Posted by MoneyController on 08.07.2024

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The UK elections handed Labour a solid majority in parliament. The new prime minister is now Labour's Keir Starmer. But how will this affect the UK stock market?

UK elections come after a difficult period for the economy

The UK elections put an end to 14 years of Conservative governments and follow a difficult period for the country: as Sandra Riccio writes in 'La Stampa', the level of debt is comparable to economic output and, at the same time, services are in crisis; in particular, the health service is in crisis.

Solid fundamentals and equity outlook

The UK, however, thanks to a stable government, could experience a market recovery in the coming months, particularly in the equity market, which is at particularly low levels. In this regard, Riccio mentions Matthew Beesley, CEO of Jupiter Asset Management: the manager explains that, as the fundamentals of UK stocks are strong, policies that foster economic growth could help to drive equity market valuations back up.

Managing the economy and the consequences of Brexit

Riccio also reports the opinion of Quentin Fitzsimmons, Portfolio Manager of Fixed Income at management firm T. Rowe Price. Fitzsimmons talks about the labour market, fiscal policy and Labour's need to continue to manage the consequences of Brexit (which Starmer, despite his pro-European past, does not want to question).

A stronger relationship with the EU?

Fitzsimmons dwells precisely on this last point, namely the importance of establishing an economic relationship between the United Kingdom and the European Union: the manager points out that the United Kingdom could increase its attractiveness in the eyes of investors by making its relationship with the European Union more solid.

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