Markets for shares, bonds and currencies all seemingly paid little attention as the UK’s main opposition party published its most ‘radical’ election manifesto in decades.

In the days following the publication of Labour’s manifesto on 21 November, the UK’s benchmark FTSE 100 index maintained its upward momentum of the past week, gilt yields remained unchanged and the pound continued to sit at close to six-month highs against the US dollar.

An apparent narrowing of the polls on 25 November prompted a little more nervousness about the election result.

For the most part though, it would appear investors believe the likelihood is low of a Labour government and its leader Jeremy Corbyn as prime minister.

Should the Tories win, markets are expected to remain much the same, but it’s anticipated that there could be a small ‘relief rally’, with the FTSE 350 going up as some of the uncertainty over Brexit gets removed.

Based on the Conservative’s manifesto pledges on 24 November, there aren’t many sectors of the market which will be impacted, though utilities may be hit as the Tories pledge to keep the existing energy cap.

The likes of Centrica (CNA), which owns British Gas, have warned that the cap has dented profit.

Housebuilders and construction companies may go up as the Tories pledge to invest another £100bn in infrastructure spending, while a reduction in business rates should also provide modest relief to the troubled retail sector.

Labour’s manifesto on the other hand has some sectors running for cover.

The party has pledged to renationalise the rail, water, energy and mail sectors, and part of telecom giant BT (BT.).

It has argued that this is in the national interest as companies have a monopoly in these strategically important sectors, and therefore have little incentive to reduce prices for customers or raise workers’ wages.

In response, utilities National Grid (NG.) and SSE (SSE) have moved their ownership structures offshore – to holding companies in Luxembourg, Hong Kong and Switzerland – in order to protect ‘shareholders’ interests’ in the case of renationalisation.

The impact on investors would be significant if Labour won power and pressed ahead with renationalisation, with big selloffs likely in the utility, infrastructure and transport sectors of the stock market.

Labour would be likely to issue several bonds if it embarks on such a programme, claiming that current low interest rates make it a good time to borrow.

Economists have expressed doubt that gilt yields would soar, because even if the Labour government does borrow a lot, its plans wouldn’t bring debt sustainability into question, and inflation isn’t expected to jump anytime soon.

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