British Pound, European Stocks Surge Ahead Of UK Election Results; Bitcoin Plummets: What's Driving Markets Thursday?

With U.S. markets closed for Independence Day, European stocks and currencies rose on Thursday, showing no signs of risk aversion despite the ongoing UK legislative elections.

The Labour Party is expected to achieve a landslide victory, ending 14 consecutive years of Conservative (or Tories) leadership. Heading to the elections, the Labour Party led by about 20 percentage points against Tories.

Polls will close at 5:00 p.m. ET on Thursday, with results expected later tonight.

UK Stocks And Sterling

Ipek Ozkardeskaya, an analyst at Swissquote Bank Ltd, outlined two likely scenarios: a strong Labour majority with 150 seats — nearly double Boris Johnson‘s 80-seat majority in 2019 — or a super majority with 250 seats.

Both outcomes would enable Labour to enact significant reforms in the UK.

“Even investors want to see Labour take over the reins this time,” she remarked.

Analysts perceive a Labour victory as positive for UK stocks and sterling. Ozkardeskaya highlighted that small and medium-sized British stocks will benefit more than the FTSE 100, which is heavily influenced by global market dynamics.

On Thursday, the FTSE 100 Index rose over 1%, marking its second consecutive day in the green. Smith & Nephew led gains, up 7.6% following Cevian Capital‘s acquisition of a 5% stake. Bunzl and Melrose each rose by 2.9%, while Barclays plc BCS led the banking sector with a 2.1% increase.

The British pound, tracked by the Invesco CurrencyShares British Pound Sterling ETF FXB, edged 0.2% higher, marking its sixth consecutive session of gains. The euro saw similar performance.

Other Movers On Thursday

The dollar weakened against all major currencies, with the Japanese yen gaining 0.3% against the greenback.

Confidence that Marine Le Pen‘s far-right National Rally will not obtain an absolute majority at the second round of French elections this Sunday buoyed other European markets.

The French CAC 40 index rose 0.8%, as did the Italian FTSE Mib, while the German DAX inched 0.4% higher.

The broader Euro STOXX 50 Index, tracked by the SPDR DJ Euro STOXX 50 ETF FEZ, closed 0.4% higher, notably surging above the key 50-day moving average for the first time since June 13.

Chart: Euro STOXX 50 Index Closes Above 50-Day Average

In commodities markets, copper rallied 0.9%, marking its fifth straight positive session. Gold rose 0.2%, while silver fell 0.2%.

Oil prices showed robust gains, with West Texas Intermediate (WTI) light crude futures climbing to $84, up 0.8%.

Cryptocurrencies were the weakest market segment:

• Bitcoin BTC/USD down 3.8%
• Solana SOL/USD down 4.1%
• Ethereum ETH/USD down 5%
• Ripple XRP/USD down 5.1%
• Cardano ADA/USD down 5.4%.

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