For the first time in over two years, the primary stock market in the UK reclaimed its position as the most valued in Europe, according to statistics. According to Bloomberg statistics, the overall value of firms listed on the London Stock Exchange (LSE) surpassed the $3.13tn total value of companies listed in Paris on Monday, reaching $3.18tn.
Analysts define it as a milestone, although both values have subsequently changed and are still very close. They claim that whereas the UK market is rebounding after several years of underperformance, the French market has collapsed due to the unpredictability surrounding its election.
Before being surpassed in November 2022, the LSE dominated the European stock market for many years.
At the time, analysts attributed the performance of LSE to Brexit, a weak pound, recession worries, and the aftermath from former prime minister Liz Truss' mini-Budget.
In 2016, the LSE outperformed its counterpart in Paris by almost $1.4 trillion in value. Market investors, according to analysts, don't like ambiguity, and there are a lot of unanswered issues regarding the implications of the president of France's request for an early election. After Marine Le Pen's right-wing National Rally won elections in Europe earlier this month, President Emmanuel Macron announced the early election.
However, Susannah Streeter, head of money and markets at Hargreaves Lansdown, pointed out that Le Pen's agenda included "unfunded spending".
"They are not so focused about winning over the market," said Streeter.
When the financial markets are uncertain about the source of funding for a government's promises, they frequently respond negatively.
This is because the value of bonds, which investors lend to the government at a rate set by the market, is impacted. The interest rate on bonds, sometimes referred to as the yield, tends to increase if investors think that the policies of a current or prospective government don't make sense.
As a result, listed firms lose value since investors may frequently make more money financing to the government than buying stock in a company. This is especially true if the bond yield is very high.
As for the UK, Ms. Street continued, "The Labour party has been trying to reassure investors and the City that it is a safe pair of hands." The Labour party is presently leading in the polls ahead of the UK general election.
Additionally, the Conservative party has been attempting to persuade investors of its strategy.
At the Wall Street Journal top executives' council meeting this month, Chancellor Jeremy Hunt declared, "I think London's stock market demise is massively overstated."
"We are addressing the challenges that we do face."
Over the last ten years, appealing to corporations and investors lured to American exchanges has been one of the LSE's major problems.
Many large companies, including those with headquarters in the UK, have opted to list in the US as opposed to the UK. As a result, American stocks are now worth more, which in turn is encouraging more businesses to list there.
nearly the past five years, the value of every US listed firm has increased by nearly 85% according to the S&P All-Share index. During the same timeframe, the corresponding FTSE All-Share index has gained by less than a tenth.
AJ Bell's investment director Russ Mould stated that the UK index has increased since the beginning of the year, in part because interest rates are now more clear.
This year, they are anticipated to decline, allowing British businesses to borrow money at a lower cost.
Even yet, British equities are far less expensive than American stocks in relation to profits, and Mould speculates that investors could be overvaluing US firms while undervaluing UK ones.
He acknowledged that a small number of extremely valuable tech firms, such as Google, Apple, and Amazon, significantly influence the big US exchanges, but he did not think this could last in the long run.
"If everyone is sitting on one side of the boat, it's going to tip over eventually," he stated.
(Source:www.theguardian.com)
Analysts define it as a milestone, although both values have subsequently changed and are still very close. They claim that whereas the UK market is rebounding after several years of underperformance, the French market has collapsed due to the unpredictability surrounding its election.
Before being surpassed in November 2022, the LSE dominated the European stock market for many years.
At the time, analysts attributed the performance of LSE to Brexit, a weak pound, recession worries, and the aftermath from former prime minister Liz Truss' mini-Budget.
In 2016, the LSE outperformed its counterpart in Paris by almost $1.4 trillion in value. Market investors, according to analysts, don't like ambiguity, and there are a lot of unanswered issues regarding the implications of the president of France's request for an early election. After Marine Le Pen's right-wing National Rally won elections in Europe earlier this month, President Emmanuel Macron announced the early election.
However, Susannah Streeter, head of money and markets at Hargreaves Lansdown, pointed out that Le Pen's agenda included "unfunded spending".
"They are not so focused about winning over the market," said Streeter.
When the financial markets are uncertain about the source of funding for a government's promises, they frequently respond negatively.
This is because the value of bonds, which investors lend to the government at a rate set by the market, is impacted. The interest rate on bonds, sometimes referred to as the yield, tends to increase if investors think that the policies of a current or prospective government don't make sense.
As a result, listed firms lose value since investors may frequently make more money financing to the government than buying stock in a company. This is especially true if the bond yield is very high.
As for the UK, Ms. Street continued, "The Labour party has been trying to reassure investors and the City that it is a safe pair of hands." The Labour party is presently leading in the polls ahead of the UK general election.
Additionally, the Conservative party has been attempting to persuade investors of its strategy.
At the Wall Street Journal top executives' council meeting this month, Chancellor Jeremy Hunt declared, "I think London's stock market demise is massively overstated."
"We are addressing the challenges that we do face."
Over the last ten years, appealing to corporations and investors lured to American exchanges has been one of the LSE's major problems.
Many large companies, including those with headquarters in the UK, have opted to list in the US as opposed to the UK. As a result, American stocks are now worth more, which in turn is encouraging more businesses to list there.
nearly the past five years, the value of every US listed firm has increased by nearly 85% according to the S&P All-Share index. During the same timeframe, the corresponding FTSE All-Share index has gained by less than a tenth.
AJ Bell's investment director Russ Mould stated that the UK index has increased since the beginning of the year, in part because interest rates are now more clear.
This year, they are anticipated to decline, allowing British businesses to borrow money at a lower cost.
Even yet, British equities are far less expensive than American stocks in relation to profits, and Mould speculates that investors could be overvaluing US firms while undervaluing UK ones.
He acknowledged that a small number of extremely valuable tech firms, such as Google, Apple, and Amazon, significantly influence the big US exchanges, but he did not think this could last in the long run.
"If everyone is sitting on one side of the boat, it's going to tip over eventually," he stated.
(Source:www.theguardian.com)