Monday, July 22, 2024
HomeForeignUK’s Pound Climbs After Labour Party Clinch Election Victory 

UK’s Pound Climbs After Labour Party Clinch Election Victory 

The pound advanced today after Britain’s centre-left Labour Party clinched an expected landslide election victory to end 14 years of right-wing Conservative rule.

London’s benchmark FTSE 100 index gave up early gains following news that Keir Starmer will become Britain’s new prime minister after Labour trounced Rishi Sunak’s Conservatives as Wall Street opened flat following stronger-than-expected data on the US jobs market, reports AFP.

Labour’s widely-forecast triumph has sparked investor hope of economic stability amid easing inflation, although Starmer faces tough challenges in the form of strained public finances, a stretched state health service and flagging economic growth.

Frankfurt and Paris stocks climbed today with eurozone investors on tenterhooks before France’s crucial legislative vote this weekend.

Kathleen Brooks, research director at trading firm XTB, said that once Labour takes power “focus will quickly shift to political issues elsewhere.”

“The second round of French elections take place on Sunday. Financial markets in France are calm ahead of the vote,” she added.

In France, tactical voting efforts to block the far-right from taking over the government have partly bolstered eurozone markets.

But analysts remain wary that the second-biggest economy in the European Union could be headed for a period of political deadlock if there is no overall winner on Sunday.

“After some of the left and centrist candidates pulled out from the elections, the most likely scenario is a hung parliament,” noted research consultancy Oxford Economics.

“France will likely enter a period of uncertainty. This would result in policy paralysis, delaying fiscal consolidation and preventing any meaningful reforms until the next presidential election.”

– US jobs data –

Investor sentiment had been given a boost Thursday as softer US labour market data gave the Federal Reserve room to cut interest rates.

Data sent out today showed US job gains eased slightly in June while unemployment edged up, government data showed, in the latest sign that the world’s biggest economy is cooling as policymakers hope.

The country added 206,000 jobs last month, said the Labor Department, marking a slower pace of hiring than May’s revised 218,000 figure.

But the gains still beat a consensus estimate of 185,000, signalling that the labour market remains relatively resilient.

Wall Street opened relatively flat, with trading activity fairly low as many investors make a long weekend after markets were closed Thursday for the July 4 Independence Day holiday in the United States. analyst Patrick O’Hare said, “The key takeaway from the report is that labour market conditions are softening, which will provide the Fed some cover to cut rates in September if it so chooses.”

He noted market expectations of a rate cut in September rose slightly, while bond yields cooled.

Asian stock markets closed mostly lower today, a day after Tokyo’s indexes hit record highs.

The yen recovered further against the dollar after this week striking the lowest level in nearly four decades.

– Key figures around 1330 GMT –

New York – Dow: DOWN 0.1 percent at 39,264.20 points

New York – S&P 500: FLAT at 5,538.88

New York – Nasdaq Composite: UP 0.1 percent at 18,210.93

London – FTSE 100: DOWN less than 0.1 percent at 8,234.48

Paris – CAC 40: UP 0.2 percent at 7,713.14

Frankfurt – DAX: UP 0.7 percent at 18,581.92

EURO STOXX 50: UP 0.3 percent at 5,004.01

Tokyo – Nikkei 225: FLAT percent at 40,912.37 (close)

Hong Kong – Hang Seng Index: DOWN 1.0 percent at 17,799.61 (close)

Shanghai – Composite: DOWN 0.3 percent at 2,949.93 (close)

Pound/dollar: UP at $1.2808 from $1.2765 yesterday

Euro/pound: DOWN at 84.56 pence from 84.69 pence

Euro/dollar: UP at $1.0829 from $1.0813

Dollar/yen: DOWN at 160.92 yen from 161.16 yen

West Texas Intermediate: FLAT at $83.88 per barrel

Brent North Sea Crude: DOWN 0.1 percent at $87.38 per barrel


Most Popular

Latest Post