UK bond markets to open 1am after election
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Markets for UK futures and gilts will open at 1am London time on May 7 as the general election is decided.
A note from the New York Stock Exchange London International Financial Futures and options Exchange has revealed that markets for three-month short Sterling futures, short, medium and long gilt futures and also FTSE 100 index futures contracts will be available for trading at 1:00am GMT on May 7, six hours earlier than usual.
Many voices have raised concerns over the prospects of an election that offers no majority Government, which may lead to a sell-off in UK debt as investors doubt the ability of a hung Parliament to deal with the large UK budget deficit. This would now be possible as a decision is made in the early hours of Friday.
The NYSE Liffe says the earlier opening hours are designed to enable market users to participate in future trades as the results of the general election become known.
It says: “Inevitably, events such as general elections can give rise to uncertainty or volatility in all financial markets.”
But Deutsche Bank chief UK economist George Buckley is not concerned about the prospects of gilt yields rising significantly after a hung Parliament announcement as a result of a debt sell-off.
He says: “There is general agreement between the parties about the need to tighten fiscal policy is encouraging. Also, the outcome of a hung Parliament is probably already priced into the markets, potentially limiting any move in market rates if such a situation were to result.
“Still, there may well be a period of uncertainty in the immediate aftermath of the election about what form the government may take, which could lead to a rise in yields.”
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