Hung, drawn and quartered

Author: Proposito Team
Published: 12th May 2010

So after a month of electioneering, and five days of negotiating, David Cameron has entered No. 10 with Nick Clegg as his ‘right’ hand man. The historic coalition is the first time the Conservatives and Liberal Democrats have had a power-sharing deal at Westminster and the first coalition in the UK of any type since the Second World War.

Markets responded cautiously this morning, as the youngest Prime Minister for 200 years began shaping his government. The FTSE 100 opened a little over 46 points lower than its overnight 5334.21 value. It has since recovered early losses trading up close to its overnight mark. A bumpy ride will no doubt ensue until full details of the coalition government emerge. Before yesterday’s announcement by David Cameron that he had been invited by The Queen to form a government, share prices had been buoyed by news of the Greek bailout and the announcement that Gordon Brown would step aside to help pave the way for a Con-Lib Dem coalition. This prompted a drop in the value of sterling against the dollar. It looks like we will see plenty of volatility in the coming days and weeks as economic turmoil in Europe and remaining political uncertainty at home sends stock markets and currency markets into overdrive.