On July 4, U.S. citizens celebrated Independence Day. It looked like the country that the U.S. broke away from would choose its own freedom from 14 years of Conservative Party rule.
Many people think that after the early election that Tory prime minister Rishi Sunak called, he will give the keys to 10 Downing St. to Keir Starmer, who is the leader of Labour.
There are many ways to judge a leader’s time in office, and stock-market performance is one of the most common ones.
Of course, there is a big catch: that correlation is not the same thing as causation.
For instance, a prime minister or president may have a great track record with the stock market even if they don’t change any policies and just take office when prices are falling.
Or, stocks may go up in anticipation of a new leader’s market-friendly policies. After that, they may find it hard to make more progress. The right economic decisions may have been made, but investors didn’t get much out of the date of the prime minister’s appointment.
A political leader can’t do much about a domestic stock market that doesn’t have any popular sectors if that’s what they take over. This is because elections happen every four years.
As for the U.K., its main stock market index, the FTSE 100, is affected less by the country’s economy and policies and more by the prospects for global growth, over which the prime minister of Britain clearly has little control. According to LSEG, more than 80% of the companies in the FTSE 100 make money outside of the country.
Still, Sunak’s legacy will be better because he took office on October 25, 2022, when investors were, let’s say, not very enthusiastic about U.K. assets.
She took over from Liz Truss, who had only been in charge for 50 days (remember the lettuce?) before she had to step down because of a bad budget plan that scared the markets and sent bond yields skyrocketing and stock prices plummeting.
The FTSE 100 UK:UKX was at 7,013.99 the night before Sunak took over as Prime Minister. By midday on July 4, 2024, it had risen to 8,230.4, a 17.3% increase.
This is a good return, helped by a rebound in real estate and other interest rate-sensitive industries. This is because falling inflation made it more likely that the Bank of England would lower interest rates this year. Copper and gold prices HG00, 3.31% GC00, 0.16% have recently hit record highs, which has also been good for miners.
The FTSE 250 UK:MCX, which is made up of midcap stocks from around the UK, is also up 18.6%.
But we need some perspective. The DAX index in Germany has gone up 42% under Sunak’s watch, the CAC 40 index in France has gone up 25% (it was up much more but had to take a break because of the election), and the S&P 500 on Wall Street has gone up 46%.
However, the FTSE 100 did set a new record high during Sunak’s leadership. This may have been because foreign investors thought the Stanford Business School graduate and former Goldman Sachs analyst was a safer leader than Truss and Boris Johnson.
“After Trussonomics, the financial markets looked to Mr. Sunak and Jeremy Hunt, who he named as Chancellor, to keep things calm.” “That’s what they got, in a way,” says Russ Mould, investment director at AJ Bell.
“Mr. Sunak’s short term makes it hard to draw comparisons with other prime ministers,” Mould says. “But investors in the stock market probably won’t think too badly of him.” He shows this with the table below, which shows how the FTSE All-Share XX:ASX has changed.

Still, recent gains for stocks may also reflect what is to come.
Polls have long shown that the Labour Party would take power in an election that had to take place before the end of 2024. The next chancellor of the Exchequer should be former Bank of England economist Rachel Reeves, whose manifesto pledges are not considered especially problematic for the City of London.
Investors seem relaxed at the prospect of five years of Reeves. “There have been gains [in shares] for some of the U.K.s biggest banks and homebuilders, the latter are rising on the back of expectations that they will receive incentives from the next government to build more homes, while gains for the banks suggests that the market may also think the likely change in government could be good for the U.K.’s economy,” says Kathleen Brooks, research director at XTB.