The unsurprising election of the new Tory leader and therefore (at least for a while) Prime Minister is bound to be of interest to investors, because it changes the dynamics of the everlasting Brexit saga.
In the short term, any stock market reaction will be ‘false’ because there is no new certainty. In a few weeks, the range of possibilities will narrow down.
The EU wants post Brexit Britain to deal with it in as similar s way as possible as now, because that is in its best interests. Arguably, if free movement was stopped, so would most British people – the sovereignty and common market stuff is less motivating for many, although I do realise not all.
I think the EU will not fall over at any new bravado from the new PM, but may well want to offer him enough concessions to get a deal through Parliament. After all, they are politicians too.
Investors need to pay more attention to what the situation looks like in late September. A no deal exit is without any doubt going to impact UK investment markets like a thunderstorm, if not a tornado. A smooth exit with a managed deal (sort of softish) would see a relief rally.
What do I think will happen? I really have no idea, so am keeping plenty of cash on hand to maximise my options.
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