Markets calm ahead of next political reshuffle

Given the unprecedented events involving British politics in recent weeks, investors are hoping for less volatility and more stability in both the government and on the markets

UK markets on Friday were calm as the nation sat tight, in anticipation of the third Prime Minister of the year being appointed at some point over the next week. The FTSE 100 dipped 0.4% to 6,916, while the more domestically focused FTSE 250 index slipped 0.7%. Thirty-year gilt yields remained just below 4%, while the pound held firm at $1.1204.

Russ Mould, investment director at AJ Bell, said:  “Even though there is some sense of peace in the markets now, this could all change next week when we have a clearer idea of who is in the running for Number 10 and how each candidate might reshape the country’s policies to avoid economic shocks.

“Heading up corporate news in the UK was Intercontinental Hotels. Its average rate per available room has shot up by 28% as demand returns to the travel sector. The thorn in its side is China where tough restrictions around Covid have disrupted trading once again, enough to spook investors and send the share price down 3%.

“Sales growth has ground to a halt for DIY products seller Wickes. While the company seemingly takes a positive view, saying that sales have stabilised after weakness in previous quarters, the company still faces the fact that the DIY boom seen during the pandemic has lost momentum.

“Clothing seller ASOS continued its descent as investors worry about its position in a cost-of-living crisis. The feedback from its latest analyst presentation was negative, with concerns about the company going from a net cash to net debt position and a lack of confidence in its strategy to survive an economic slowdown. The shares are now down 78% year-to-date.”