The UK stock market has largely ignored this morning's political events, as Prime Minister Theresa May attempts to fight of a leadership challenge tonight (December 12).
The FTSE 100 is up 1.12 per cent today while the FTSE 250, which is more exposed to the UK domestic economy, is up 0.93 per cent.
Meanwhile sterling is up 0.4 per cent against the dollar to $1.25 - though the currency is still at its lowest level since March 2017.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said the shares most sensitive to a hard Brexit, such as British banks, had not moved while market reaction as a whole had been "relatively muted".
He said the stock market may be showing "Brexit fatigue" as company valuations now already reflect the range of possible negative outcomes from the UK’s exit from the EU.
Mr Khalaf said: "This morning, the share prices of companies the market has pinned to the Brexit mast have unexpectedly risen, including names like Lloyds and RBS - although they are still in the red across the last week as a whole.
"This goes to show that trying to forecast market movements based on the outcome of unpredictable political events is a bit like trying to play darts while riding a unicycle. Investors are therefore better served by maintaining balance in their portfolio in times of great uncertainty like these.
"We can expect markets to remain febrile while this current bout of political infighting plays out, with the pound and UK domestic companies playing the leading roles."
Joshua Mahony, analyst at IG Group, noted that sterling rose in the immediate aftermath of the announcement of the leadership contest.
He said this was partly because markets had anticipated this round of political uncertainty, and partly because markets felt the chances had pf Brexit not happening by March 2019 had increased.
david.thorpe@ft.com
