London’s FTSE 100 deepened losses on Tuesday after Theresa May called for a snap general election to be held in the UK on 8 June, putting it on track for one of its worst single-day performances in months.
The index of blue chip companies was down around 1.2 per cent immediately after Ms May’s announcement, although most of those declines had stemmed from losses across the mining and natural resources sectors earlier in the day.
Shortly after opening, the index had already slipped to its lowest level in two month wiping around £23bn off the collective value of the UK’s biggest companies. But Ms May’s announcement introduces fresh uncertainty for traders and investment professionals.
Stocks are generally considered to be a relatively risky financial asset to hold during times of economic or political uncertainty, with investors tending to prefer assets like Japan’s yen, the Swiss franc, gold and certain government bonds.
“For investors it adds another layer of complexity to an already uncertain picture for UK and European assets,” said Neil Wilson, an analyst at ETX Capital.
“Volatility is likely to remain elevated over the coming weeks. And as elections are so unpredictable, there is always the outside risk it could spark a reversal in the entire Brexit process,” he said.
