The morning after the UK general election, one thing was evident from conversations with investors – there were slim pickings as far as buying opportunities were concerned.
The day played out like a “low volatility EU referendum,” said Alan Higgins, Coutts CIO.
“The impact of the event on markets was from the same playbook – weaker sterling, a stronger FTSE 100 and, generally, markets coming back pretty quickly.”
However, “the only thing that is potentially of interest, that hasn’t gone far enough yet, is the underperformance of the FTSE 250,” he said.
The FTSE 250’s reaction to the hung parliament election outcome was immediately felt as markets opened on Friday.
Within the first hour of trading, the index had dived by 0.95%, although, it stabilised shortly afterwards.
At the time of writing, the mid-cap index was down 0.27% to 19,689.2, its lowest point in the last month.
Meanwhile, the FTSE 100, reacted positively to the weakness in sterling and was trading upward by 0.8%, at one point.
In the grand scheme of things, the movement of the indices was “pretty small,” said Higgins, “but if that diversion had gotten any wider, that would tempt us”.
While the latest political events have reconfirmed Psigma CIO Tom Beckett’s “commitment to look at all parts of the world, not just the UK,” he also admitted that domestic stocks were looking attractive relative to other areas of the market.
