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Analysis

UK General Election

News & Analysis

 

The upcoming UK General Election on 4 July 2024 will determine the next British government and its prime minister. Key market impacts will depend on the result and will start to become clear once campaigning starts – they are likely to be concentrated in the UK stock market. Learn how UK elections work and how to prepare your portfolio.

 

How to trade the UK General Election


The next UK general election will take place on 4 July 2024, and polls indicate a clear Labour victory. Though the next UK election is not likely to cause a major shift in global markets, partially due to full pricing of the expected outcome, it is still an important event for traders exposed to UK stocks, GBP or bonds.

Market responses: past elections


Market reaction to recent elections has varied. The most recent Conservative victory in 2019, saw a strong positive reaction from stocks, while their less decisive 2017 victory volatility across major markets. The market reaction to any result will depend on how decisive it is, how closely it aligns with opinion polling, and what the expected policies of the incoming government are.

Opinion polling: Labour far ahead


Current opinion polling has consistently suggested a major victory by the current opposition party, Labour. Historically Labour has been seen as less pro-business than the Conservative Party, and stock markets have tended to perform well after decisive Conservative victories. This result is in no way guaranteed, however, and should not be assumed this time around.

Interpreting results


How a given result is interpreted, as well as the share of seats between the two main and minor parties, depends on the factions in power within each group. Either way, a decisive win with a stable majority will normally be seen as a net positive by market analysts.

What are the General Elections in the UK?


UK General Elections are fought in 650 constituencies, with the main two parties normally running a candidate in every seat. Whichever party can command an absolute majority after the election, either alone or in coalition, will form the next government. The only two parties who have won an election since 1906 are the Conservatives and Labour, but smaller parties, like the Scottish National Party and Liberal Democrats have a limited but significant influence.

In previous elections, research suggests that markets perform well in the run-up to elections where the likely winner is clear – like 1997’s Labour landslide. Conversely, when opinion polling suggests a close or uncertain outcome, stock markets tend to sell-off in the run-up to the election, as seen in 2010’s narrow Conservative victory with Liberal support. Recent polling shows that this election is not seen as particularly uncertain.

UK General Election 2024: Who won, and what does it mean for the markets?

The UK General Election results are in: a landslide victory for the centre-left Labour Party.

UK General Election: Key Labour policies and potential market impact

The 2024 General Election is upon us, and the result is not in doubt. All pollsters are agreed that the UK will vote in a new Labour government. The market reaction to any election depends on multiple factors.

UK General Election: Historical performance in election years

2024 is a major election year all around the world, with elections in the EU, USA and UK. Traders can look to past election years to get an idea of how markets may perform.

UK General Election: Potential outcomes and market impact

With the 4th of July general election getting close, most polling indicates a clear Labour victory. Recent polls predict a disastrous result for the governing Conservative party, with the expected result the most comprehensive defeat for any party since the 1930s.

UK General Election: Key markets to watch

Traders active in UK markets – indices, stocks, bonds, or currency pairs involving the British Pound – could see increased volatility in the run-up to and aftermath of the election.

UK General Election: Five stocks and indices to watch

The next UK General Election will take place on 4th July 2024, and CFD traders will be watching the results closely. Some of the key markets expected to see additional volatility around the election include UK stocks, indices, and the GBP.

Polling and likely market results


Since 2021 / 2022 opinion polls have consistently shown a large lead for the Labour Party. Though this can change during the general election campaign, as time goes on this becomes less and less likely. Hypothetically, based on previous market tendencies, we can expect to see strong stock markets in the run-up to the election, perhaps followed by some weakness after the result since the market’s usual ‘preferred’ party would have decisively lost.

Stocks and GBP reaction


The largest market impacts are likely to be on FX and stocks, with stocks potentially following the above pattern of pre-election strength followed by volatility after Labour’s victory, while the British Pound will probably perform well both before and after the election. British government bonds will move counterpoint to stocks, seeing gains in stock market volatility and slight losses when stocks perform well.

Infrastructure and housebuilding


Neither party is likely to radically change the UK’s trade policy, or renegotiate Britain’s relationship with the EU, so this election is unlikely to create the dramatic price swings seen following the 2016 Brexit referendum. CFD traders should look for impacts on specific stock sectors such as housebuilders, since promises about infrastructure and state spending are often made in the run-up to the election. The markets most expected to be impacted by the UK general election are stocks or market sectors seen as winners or losers on specific policy points. UK rail stocks, which the Labour Party has promised to nationalise, may be strongly impacted.

Why trade the UK General Election with ADSS?

ADSS offers traders access to key markets impacted by the UK’s general election, including UK stocks, ETFs, indices, and GBP-linked currency pairs in FX.

Because our markets are traded as CFDs, ADSS clients can take a buy or sell position without owning the underlying asset.

Trade stocks and index ETFs on key sectors and companies.

Go long or short on GBP FX pairs, and trade the UK election’s market volatility.

Receive trading support 24/5, including 1-on-1 assistance.

Platform

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Preparing your portfolio


Unlike globally significant elections such as the 2024 American Presidential Election, the next UK general election will probably not cause a massive realignment in global markets. But the impact on UK stocks, the GBP, and regional equity markets will be significant. Look for opportunities and hedge against risks in specific single sectors such as railways or infrastructure. This requires keeping a close eye on ongoing election updates since promises around spending and infrastructure will continue to be made as the election approaches.

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FAQs

When is the next UK general election scheduled?

The next UK general election will be held on 4 July 2024.

How do general elections impact UK financial markets?

Market reactions to UK elections vary based on the expected outcome and decisiveness of the result. Historically, stock markets perform well in the run-up to elections with a clear likely winner. However, close or uncertain outcomes can cause volatility. For example, the Conservative victory in 2019 saw a strong positive reaction, while the less decisive 2017 result led to market volatility. Any stock and FX reaction is likely to be short-term.

Which asset classes are most affected by UK general elections?

The largest market impact will be on FX and stocks. Stocks may experience pre-election strength followed by volatility if the Labour Party wins a decisive victory as predicted. Specific sectors, such as housebuilding and railways, may see significant volatility based on campaign promises and policy changes.


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