The pound advanced Friday after Britain鈥檚 centre-left Labour Party clinched an expected landslide election victory to end 14 years of right-wing Conservative rule.
London鈥檚 benchmark FTSE 100 index gave up early gains following news that Keir Starmer will become Britain鈥檚 new prime minister after Labour trounced Rishi Sunak鈥檚 Conservatives as Wall Street opened flat following stronger-than-expected data on the US jobs market.
Labour鈥檚 widely-forecast triumph has sparked investor hope of economic stability amid easing inflation, although Starmer faces tough challenges in the form of strained public finances, a stretched state health service and flagging economic growth.
Frankfurt and Paris stocks climbed Friday with eurozone investors on tenterhooks before France鈥檚 crucial legislative vote this weekend.
Kathleen Brooks, research director at trading firm XTB, said that once Labour takes power 鈥榝ocus will quickly shift to political issues elsewhere.鈥�
鈥楾he second round of French elections take place on Sunday. Financial markets in France are calm ahead of the vote,鈥� she added.
In France, tactical voting efforts to block the far-right from taking over the government have partly bolstered eurozone markets.
But analysts remain wary that the second-biggest聽economy聽in the European Union could be headed for a period of political deadlock if there is no overall winner on Sunday.
鈥楢fter some of the left and centrist candidates pulled out from the elections, the most likely scenario is a hung parliament,鈥� noted research consultancy Oxford Economics.
鈥楩rance will likely enter a period of uncertainty. This would result in policy paralysis, delaying fiscal consolidation and preventing any meaningful reforms until the next presidential election.鈥�
Investor sentiment had been given a boost Thursday as softer US labour market data gave the Federal Reserve room to cut interest rates.
Data out Friday showed US job gains eased slightly in June while unemployment edged up, government data showed, in the latest sign that the world鈥檚 biggest聽economy聽is cooling as policymakers hope.
The country added 2,06,000 jobs last month, said the Labour Department, marking a slower pace of hiring than May鈥檚 revised 2,18,000 figure.
But the gains still beat a Briefing.com consensus estimate of 1,85,000, signalling that the labour market remains relatively resilient.
Wall Street opened relatively flat, with trading activity fairly low as many investors make a long weekend after markets were closed Thursday for the July 4 Independence Day holiday in the United States.
Briefing.com analyst Patrick O鈥橦are said, 鈥楾he key takeaway from the report is that labour market conditions are softening, which will provide the Fed some cover to cut rates in September if it so chooses.鈥�
He noted market expectations of a rate cut in September rose slightly, while bond yields cooled.聽
Asian stock markets closed mostly lower Friday, a day after Tokyo鈥檚 indexes hit record highs.
The yen recovered further against the dollar after this week striking the lowest level in nearly four decades.