FTSE 100 preview: Index looking up amid hung parliament prospects

on Jun 9, 2017

The FTSE 100 index looks set to open higher this morning, finding support in a weaker pound, with investors digesting the results from yesterday’s general election which seem to have left no single party with a clear majority. In the US, stocks closed higher following former FBI director James Comey’s testimony.

IG’s opening calls suggest that the Footsie will start the session 0.21 percent higher at 7,465 points. The blue-chip index is expected to open higher this morning, finding support in sterling which has plunged as the results from yesterday’s election seem to point to a hung parliament, with Prime Minister Theresa May’s Conservatives losing their majority. The election comes as the UK faces negotiations with the European Union following last year’s Brexit vote.

“This is messy for the UK economy and its Brexit negotiations and hence is a negative for the pound and share market,” Shane Oliver, chief economist at AMP, told Reuters. The newswire also quoted Michael Judge, head of corporate dealing at broker OFX, as forecasting “a period of market uncertainty, which will be compounded by the elephant in the room this time around – the forthcoming Brexit negotiations”.

Stocks on the other side of the Atlantic closed higher last night, with investors focusing on Comey’s testimony before the Senate. The former FBI director said that he kept records of his conversations with President Donald Trump, because he thought Trump might ‘lie,’ as reported by CNBC.
“Investors are not spooked by this at all,” Eric Aanes, president and founder of Titus Wealth Management, told CNBC. “The only thing that could be an issue is [potential] delays into tax cuts.”
At home, the Footsie shed 28.64 points to end the session 0.38 percent lower at 7,449.98, with investors staying on the sidelines ahead of the election outcome.
Today’s macroeconomic agenda includes UK manufacturing and industrial production data for April, due out at 09:30 BST. No blue-chips are scheduled to update investors on their performance this morning.