After the unexpected result of the UK election last Friday, the global stocks found a way upward and the greenback consolidated higher. As the Conservative Party lost its majority, the British pound wallowed and the European market dwindled. Following the result, Labour leader Jeremy Corbyn called on Theresa May to step down, spurring tailwinds in the pending Brexit negotiations.
The UK Election
Far better than expected, the Labour Party, headed by Jeremy Corbyn, secured seats in the recently held general election in the United Kingdom. Right after the results, Prime Minister Theresa May asked permission from Queen Elizabeth II to form a new government.
To proceed to Brexit’s formal exit from the European Union, May has to stay in power as the other party insists on staying under the union. The current prime minister needed the support of the Democratic Unionist Party of Northern Ireland to get back the dominance over the proceedings over Brexit.
Brexit negotiations are due to start in the next few days, and the lack of support will definitely derail the process.
On the other hand, the expectant Prime Minister Jeremy Corbyn called for the resignation of May as he entailed the lack of votes, confidence and support for the Conservative Party.
Global Stocks
The probability of a hard Brexit heightened after the outcome of UK election, the global market took this opportunity to go back to the race. Back in June 2016, the UK referendum pushed most of the stocks of the emerging economies, but after the results, it seemed the tables have been turned.
US stocks, in particular, soared higher last Friday. Nasdaq futures gained 0.05 percent to 5,888.12 while S&P 500 Futures advanced 0.11 percent to 2,435.25 during the mid-session. As the dollar edged higher, the US dollar Index also added 0.51 percent to 97.23.
The American tech software giant Apple Inc (NASDAQ:AAPL). edged 0.12 percent to 154.99 while Microsoft (NASDAQ:MSFT) earned 0.25 percent to 72.13 in the pre-market session on Friday.
Meanwhile, Dow 30 finished 0.04 percent up and DAX rallied 0.42 percent after the election results.
Should the Brexit will be delayed, the market may recover the losses from the UK referendum. The UK market will be weakened for a while due to political concerns, thus, its counterpart could have a steady to a bullish run in the coming sessions.
British Currency Market
As expected, market uncertainties poured in the British pound. GBP/USD lost 1.69 percent in the mid-session of the results day, trading at 1.2734. The sterling was safely seated at 1.2900 levels before the elections, and now, it shows bearish points as it falls near to April lows.