“Euphoria returns to the City! Lobster Thermidor is back on the menu! Buy shares in lap dancing bars! The City is safe for five years.”
Those were the words of Nick Batsford, a former City trader turned entrepreneur, as he analysed the ramifications of the 2015 general election result in the heart of London’s financial district.
Batsford, owner of an internet television that recommends investments called TipTV, was celebrating in the Square Mile watering hole Ye Old Watling, alongside other City colleagues. Some of those peers had slept in armchairs of private members’ clubs on Thursday evening before “popping off for a sauna and a new shirt, and then going into the office”.
Yes, the City tends to vote Tory, something so obvious that even the UK’s accident-prone opinion pollsters might have spotted it. The Tories were back and markets were up. What’s not to like?
The official explanation for Friday morning’s market rally revolved around the removal of the uncertainty of political parties trying to cobble together deals. But it also rallied because the City was in a good mood: its team had won.
Joshua Raymond, chief market strategist of trading firm City Index, said: “It’s [down to] both. The uncertainty element being removed is very beneficial for the market, as it brings consistency and a strong government. The other part of it, is that a Conservative government is seen as pro business, pro City, pro the economy.”
Quite. There were cheers on City trading floors on Friday morning when the news came in from Morley and Outwood that shadow chancellor Ed Balls would be looking for a new job, while some were crueller about the same outcome for the former chief secretary to the Treasury, Danny Alexander, making jibes about the colour of his hair and imagining George Osborne’s glee at the news.
But does any of this actually matter to the markets, rather than the market practitioners? Most agree that the City of London, along with the UK’s economy, is in reality at the mercy of international rather than domestic factors.
Simon French, senior economist at the stockbroker Panmure Gordon, wrote a research paper before the election called “#GE2015: Why it matters surprisingly little for the markets.”
By Friday lunchtime he was taking news of early market gains on the chin – literally so after top-edging a cricket ball during a game on Thursday evening. His thesis still stands, though, he says.
“It’s a relief rally,” he opined, as he studied the new UK electoral map, which now looks more like a shoddy effort at reproducing the Armenian flag. “The FTSE had been trading flat. Anybody would play this volatility.”
That certainly looked true in certain markets. For instance: shares in opinion pollster YouGov were very up and down.
This article was written by Simon Goodley, for theguardian.com on Friday 8th May 2015 17.02 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010