FTSE down as Theresa May calls snap election

The FTSE 100 is on track for its worst day since Brexit after Prime Minister Theresa May announced a snap general election this morning.

Speaking at Downing St, she announced it will take place on 8 June.

While sterling is up and gilt yields are stable, the FTSE is down 1.6 per cent to 7,208.04.

Sterling regained ground hitting $1.2650 having fell earlier in the morning as news spread that May was due to make a surprise announcement, down 0.3 per cent to $1.2528 an hour before the news of the election was confirmed.

Shilen Shah, bond strategist at Investec Wealth & Investment, says the announcement suggests May wants full control of the Brexit process without any interference from the opposition.

Shah adds:“Following some initial weakness ahead of the statement, Sterling has stabilised and is slightly up on the day. Gilts yields have also been stable, with the 10-year yield hitting a session low of 1.01 per cent.”

May’s statement adds to political volatility in Europe and further afield with the first round of voting in the French presidential elections set to take place this week.

Aberdeen Asset Management investment manager Luke Bartholomew says it will take investors some time to digest the effects of the election in the next few days.

Bartholomew says investors will have to factor whether the election will make a softer stance on the Brexit negotiations more likely.

“The election should hand Theresa May a much bigger mandate to stand up to the harder line, anti-EU backbenchers which currently hold a disproportionate sway over her party’s stance on Brexit. That would be welcomed by financial markets.”