Buxton: Will the market ignore the Election?

If there is any consensus amongst investors, strategists and financial commentators, it is that in the run-up to polling day sterling will weaken further, gilt yields will rise and the equity market will fall.

The prospect of a hung parliament is a central scenario for many and, with it, the prospect of ineffective government and a crucial inability to take decisive action to rein in Britain’s fiscal deficit. As this outcome looms ever closer, so investors will sell sterling, gilt yields will rise in anticipation of the UK losing its AAA-rated sovereign status - plus heavy gilt issuance as far as the eye can see - and equities will inevitably be dragged back by rising bond yields. Clearly, as markets traditionally hate uncertainty, it would be no surprise if equities were indeed nervous and...