Advisers hope snap election will bring Brexit clarity

Parliament-Building-UK-London-700x450.jpgAdvisers have played down the prospect of major market disruption ahead of the snap election in June as they expect a Conservative majority should eliminate political “distractions”.

Prime Minister Theresa May announced a snap election in a surprise statement yesterday. The general election will be held on 8 June.

While some market uncertainty is expected in the short-term, advisers argue a bigger mandate for the Conservative party would give more clarity on the direction the UK will take in its Brexit negotiations.

Yellowtail Financial Planning managing director Dennis Hall says the snap election is “probably a good call” despite warning of some market volatility in the coming weeks.

After a sharp sell-off ahead of May’s announcement, the pound surged to a five-month high $1.2729 against the dollar, from a low of $1.2513.

In contrast the FTSE 100 was trading at 7,195 points,1.8 per cent lower on the day.

Hall says: “It’s another period of instability after the Brexit referendum and hopefully this is the last one for a while. May wants to have a clear mandate going forward to go ahead with Brexit negotiations. She wants to get rid of all the distractions in other parties which is also good for markets.”

Chase de Vere financial planner Patrick Connolly says while an early election adds some uncertainties, people already see the Conservatives remaining in power and adding more seats in the government.

A poll run by YouGov published last Sunday showed that the Conservatives have a 21-point lead over Labour with a 44 per cent vote share to 23 per cent.

Connolly says: “Many people think the Conservatives will win. We won’t move any investments at the moment although we don’t know if May will go for anything radical in the manifesto.”

Jonathan Davis Wealth Management managing director Jonathan Davis says: “As soon as I heard the news I took immediate action and did nothing. I will do the same on the day of the election.

“The UK election won’t have any effect on equity markets. The Conservatives are going to win and there will be no effect commodities either, bonds as well as sterling.”