How Each U.K. Election Outcome Could Impact the Stock Market – Gooruf

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By contrast, a Labour majority would clearly be the worst outcome for stocks, said Rupert Thompson, head of research at 1.9 billion-pound fund manager Kingswood, particularly for sectors such as utilities and transport that have most to lose from Jeremy Corbyn’s nationalization plans. For those betting on a rally, it’s as well that the Conservatives are ahead in the polls. Cyclical stocks whose earnings are tied to economic prosperity would probably see the biggest benefit, such as banks, real estate and retail. However, given many stocks from those sectors rallied over the past few months as no-deal Brexit risk receded, the upside might be contained.

Take home-builders, for example, one of the sectors most impacted by economic uncertainty stemming from Brexit. Liberum analysts Charlie Campbell and Marcus Cole cautioned in a note on Thursday that the market has already priced in a 10%-15% improvement in profits in expectation of a calmer political outlook. Labour MajorityA Labour majority is by far the least desirable outcome for stocks, said Kingswood’s Thompson, noting Corbyn‘s “radical” nationalization plans for industries including water, the railways and BT Group Plc’s Openreach broadband infrastructure unit. Those policies would “clearly hit particular segments of the market hard,” as the businesses would probably be purchased at below market price, Thompson wrote in a November report.

Utilities such as SSE Plc and postal operator Royal Mail Plc are among stocks that may have most to lose. But it’s not just Labour’s plans on public ownership that have sections of the market worried. Such a scenario might benefit stocks such as Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc.

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