So you thought U.K. voting was done being a market disruptor, didn’t you? Well, think again.
British prime minister Teresa May surprised the country by calling for yet another vote, this one designed to expedite the Brexit process. Some people in the markets think she’s gambling, much in the way David Cameron gambled on his referendum to remain or leave the European Union. The FTSE 100 fell over 2% in early morning trading today on the news.
If she wins the snap election, it would strengthen her hand in the European Parliament, where she can say definitively say that her people have spoken and they want out sooner rather than later. Polls show that the majority of Brits are in favor of Brexit still. Polls also show that she has a lead over Jeremy Corbyn’s Labor party, her only real rival. She has reportedly called for the June 8 election because she believes the opposition parties are weak. For voters, she is the Brexit candidate in yet another Brexit-related referendum. A vote for her is a vote for Brexit.
But if history repeats itself, Theresa May could face the same fate as Cameron, meaning Brexit could die on the vine.
According to a poll by YouGov, the British conservatives have a 21-point lead over Tony Blair’s old Labor party. This is the first time in nearly 10 years that it’s had such a huge lead. She still has week support in Scotland and deteriorating support in Northern Ireland. For investors who like to place regime changing bets on markets, Scotland and Northern Ireland make for a strong case in favor of Labor. The race to 10 Downing Street could easily get harder. June is far away in political land. A lot can happen in the next two months, so investors with securities priced in pounds and euros will have to either take their lumps or…
Place Your Bets
During the Brexit referendum, investors hedged their risk through the German DAX and FTSE indices. “We think that as we run close to June, a similar situation will take place. I’m expecting the implied volatility for the index to surge further,” says Naeem Aslam, chief market strategist for ThinkMarkets in London. Aslam correctly called the Brexit vote, going against the consensus view and the polls.
ThinkMarkets, a derivatives and forex broker, thinks the volatility in the FTSE and in European indexes will increase in the coming weeks. Before the announcement today, Aslam was forecasting the pound to hit 1.255. It is now a weaker 1.275. The resistance for the pound is near the 1.30 mark.
“We think this where the dust could settle,” he says about a 1.30 pound. “Some people in the market are thinking that if Theresa May wins, she would represent a more unified government and this would help her to get the affairs passed in the parliament.” Prepare For Yet Another U.K. ‘Referendum’
So you thought U.K. voting was done being a market disruptor, didn’t you? Well, think again.
British prime minister Teresa May surprised the country by calling for yet another vote, this one designed to expedite the Brexit process. Some people in the markets think she’s gambling, much in the way David Cameron gambled on his referendum to remain or leave the European Union. The FTSE 100 fell over 2% in early morning trading today on the news.
If she wins the snap election, it would strengthen her hand in the European Parliament, where she can say definitively say that her people have spoken and they want out sooner rather than later. Polls show that the majority of Brits are in favor of Brexit still. Polls also show that she has a lead over Jeremy Corbyn’s Labor party, her only real rival. She has reportedly called for the June 8 election because she believes the opposition parties are weak. For voters, she is the Brexit candidate in yet another Brexit-related referendum. A vote for her is a vote for Brexit.
But if history repeats itself, Theresa May could face the same fate as Cameron, meaning Brexit could die on the vine.
According to a poll by YouGov, the British conservatives have a 21-point lead over Tony Blair’s old Labor party. This is the first time in nearly 10 years that it’s had such a huge lead. She still has week support in Scotland and deteriorating support in Northern Ireland. For investors who like to place regime changing bets on markets, Scotland and Northern Ireland make for a strong case in favor of Labor. The race to 10 Downing Street could easily get harder. June is far away in political land. A lot can happen in the next two months, so investors with securities priced in pounds and euros will have to either take their lumps or…
Place Your Bets
During the Brexit referendum, investors hedged their risk through the German DAX and FTSE indices. “We think that as we run close to June, a similar situation will take place. I’m expecting the implied volatility for the index to surge further,” says Naeem Aslam, chief market strategist for ThinkMarkets in London. Aslam correctly called the Brexit vote, going against the consensus view and the polls.
ThinkMarkets, a derivatives and forex broker, thinks the volatility in the FTSE and in European indexes will increase in the coming weeks. Before the announcement today, Aslam was forecasting the pound to hit 1.255. It is now a weaker 1.275. The resistance for the pound is near the 1.30 mark.
“We think this where the dust could settle,” he says about a 1.30 pound. “Some people in the market are thinking that if Theresa May wins, she would represent a more unified government and this would help her to get the affairs passed in the parliament.”