What Boris Johnson in Number 10 means for the markets
While sterling see-sawed around the announcement of Boris Johnson as Conservative Party leader (23 Jul) and, in turn, UK prime minister, the FTSE 100 traded higher as exporters were boosted by weakness in the pound.
Johnson’s election by party members was largely priced in and essentially he faces exactly the same position as his predecessor Theresa May. As such the market’s attention is likely to turn to how committed he is to campaign rhetoric of leaving the EU on 31 October with or without a deal.
Johnson also faces a significant challenge, given the parliamentary arithmetic, to bring MPs with him in whatever direction he decides to take. This suggests an imminent general election remains a live possibility.
Until there is clarity on this point UK assets, including domestic-facing banks, real estate and housebuilding stocks, as well as sterling, are likely to remain under pressure. That might change once the current fog clears.
Portfolio manager at Fidelity International Leigh Himsworth comments: ‘We may well look back in a few years’ time and regard this period as quite simply one of the best opportunities that we have seen to invest in UK equity markets.’