AJ Bell press comment – 2 February 2023
- FTSE All-Share is up by 11.5% in Sunak’s first 100 days in office
- Only Tories’ Edward Heath in 1970 has had a warmer welcome
- Hopes for peak in inflation and interest rates help – as does lowly starting point
“Strikes, allegations of bullying by some Cabinet colleagues and tax avoidance by others may have been some of the dominant themes of Rishi Sunak’s premiership but despite that tempestuous backdrop the FTSE All-Share has had its second-best spell ever during the first one hundred days of a new PM’s stint in office,” says AJ Bell investment director Russ Mould. “Since Mr Sunak took the keys of 10 Downing Street, the FTSE All-Share is up by 11.5%. The only time the FTSE All-Share gave a new Prime Minister a warmer welcome was 1970 when a 15.4% advance in the index greeted the Conservatives’ Edward Heath’s surprise defeat of Harold Wilson and – ironically – the mandate he received to begin negotiations to enter the Common Market, as the EU was then known.
|
Prime Minister |
Party |
Entry to office |
FTSE All Share in first 100 days |
|
Edward Heath |
Conservative |
18-Jun-1970 |
15.4% |
|
Rishi Sunak |
Conservative |
25-Oct-2022 |
11.5% |
|
Tony Blair |
Labour |
01-May-1997 |
10.1% |
|
David Cameron |
Conservative |
07-May-2010 |
2.9% |
|
Gordon Brown |
Labour |
27-Jun-2007 |
0.7% |
|
John Major |
Conservative |
09-Apr-1992 |
0.4% |
|
Theresa May |
Conservative |
07-Jun-2017 |
(3.0%) |
|
James Callaghan |
Labour |
05-Apr-1976 |
(3.2%) |
|
Harold Wilson |
Labour |
15-Oct-1964 |
(9.9%) |
|
Margaret Thatcher |
Conservative |
03-May-1979 |
(11.5%) |
|
Harold Wilson |
Conservative |
28-Feb-1974 |
(19.7%) |
|
Boris Johnson |
Conservative |
11-Dec-2019 |
(29.1%) |
|
Liz Truss |
Conservative |
06-Sep-2022 |
n/a |
Source: Refinitiv data
“Mr Sunak, meanwhile, continue to press the claims of Brexit as the correct way forward, although how much credit he can claim for the stock market’s advance during his tenure is open to debate (just as all of the blame cannot be put at Boris Johnson’s door for the collapse that greeted him. In that case, after an initial surge, the FTSE All-Share crashed as COVID-19 swept around the globe).
“The calm brought to bond and currency markets by Mr Sunak and Chancellor Jeremy Hunt, after the chaos of the preceding Truss-Kwarteng administration, may well be helping, although a mild winter, weaker oil and gas prices and hopes for a peak in both inflation and interest rates may have a larger role to play, as they have for share prices around the world since mid-October.
“Perhaps the biggest factor is just how unloved UK equities were when Mr Sunak took office – they had already tumbled thanks to fears of a recession, as well as the uproar in Westminster and the gilt market. Unloved can mean undervalued and UK assets were seen as suffering from the so-called ‘stupid discount,’ thanks to the chaos which broke out in the autumn.
“Valuation is the biggest arbiter of investment return and perhaps the rally in UK equities since Mr Sunak’s accession to power is simply the latest reminder to investors that you can have cheap stocks and good news, just not both at the same time.”
