Election fever fuels uncertainty for global markets, falling oil prices hit energy giants BP and Shell, low job openings figures hint at cracks in US economy

“It’s often said that markets don’t like uncertainty and with around half of the world’s population going to the polls this year the only sure bet is that, in the short term, uncertainty is here to stay,” says AJ Bell Head of Financial Analysis Danni Hewson.

“Watching the market reaction to India’s election, which didn’t quite deliver the result most people had been expecting, provides an insight into the volatility that could be in store as election fever migrates to the UK and then across the Atlantic to the US. Will voters plump for a changing of the guard, and if they do, what will that mean for global business?

“In the UK the polls put Labour so far ahead that investors have likely priced in that change, but to roll out another well-worn phrase, a week is a long time in politics and yesterday’s power play by Nigel Farage has certainly changed the game, though he may have wished he’d invested in a milkshake resistant raincoat before hitting the campaign trail.”

Oil Sector

“Brent crude has continued its slide downwards today, falling by more than $1 and heading close to $77 a barrel, which suppressed energy giants BP, Shell, Ithaca and Harbour Energy on London markets.

“The trajectory bodes well for motorists who will be hoping for the price at the pump to respond as swiftly on the way down as it usually does when prices go up.

“It’s also a cooling breeze for UK inflation and with OPEC+ ramping up production it should be a boon to low-cost airlines like EasyJet, which has enjoyed another good day on the FTSE 100.”

US Jobs

“The jungle drums are beating again as the latest US jobs data showed openings down to their lowest level since 2021. Whilst the CME’s FedWatch tool shows it’s beyond the longest of longshots that there will be a surprise from the US central bank next week, the rest of the year has begun to look a little less certain.

“At the moment markets are pricing in two rate cuts this year, with the first expected in September. But the resilience that has singled out the US over the past year seems to be slipping away and bad news might just herald good news for equities as investors dare to dream once more.

“The issue is that bad news could also just be taken as bad news and watching those mega caps slide today suggests investors aren’t prepared to get caught on the back foot again.”

These articles are for information purposes only and are not a personal recommendation or advice.