General Election 2015: This is what happens to markets when there's a hung parliament

Lynsey Barber
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Which party will lead in Westminster (Source: Getty)

With just one day left of campaigning, the polls indicate there's little between the main parties, which suggests the Conservatives and Labour will still be neck and neck on the day of the General Election.

With the prospect of a hung parliament, what will that do to markets?

They don't like uncertainty, that's for sure.

Analysis of data on hung parliaments, including the two in recent British history (2010 and 1974) and others around the world, indicates immediate sell offs which only deepen in the days and weeks following polling day.

Even a month after, local markets were down in each of the six examples of a hung parliament, according to research by CMC Markets, while in half of those cases they were down more than 10 per cent.

"Stock markets hate uncertainty, and the potential for an unstable government following a close race could impact the FTSE and the pound in the days and weeks following a close race until a workable solution is found, if indeed there is one," according to CMC analysts Colin Cieszynski and Michael Hewson.

The historical data takes in the UK's hung parliaments in 1974 and 2010, Canada's 2008 failure to vote in a majority, Greece in 2012 when a majority coalition couldn't be formed, Australia in 1974 which ended up in a double dissolution election and the US presidential election in 2000, which was initially too close to call.

Here's what happened to each local market the day before, on poling day, the day after, week after and month after, where data is available.

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