Election aftermath: five key market indicators to watch

From market expectations to to mortgage rates, here are the five key indicators that will show what investors and lenders make of the election outcome

With the polls so tight, traders are unsure how to position themselves. A whole host of scenarios have been considered for the election aftermath. So once some kind of result is in, how best to gauge what investors make of it?

Ian Stewart, chief UK economist at Deloitte, has come up with some key indicators to watch on Friday and the days that follow. We pick out five here.

There are three concerns for markets and businesses after the election. One fear is a breakdown of what was thought to be a consensus about deficit reduction. The second is accretion of regulation and tax, so a re-setting of micro-economic policy to the left, and the third thing is Brexit."

If the general election ushers in sustained political uncertainty that seems likely to weigh on growth, market expectations for interest rates are likely to drop further. Conversely, if the new government were decisively to break with austerity and seek to boost the economy through more public spending, interest rate expectations are likely to rise."

a) Improved confidence in the UK's growth outlook, therefore an expectation of rising interest rates

b) Concerns that a lack of fiscal tightening will usher in higher base rates or cause growing worries about the UK's credit-worthiness