UK polls are notoriously poor with an average miss of somewhere in the region of four percent therefore, a hung parliament, a large Tory majority or pretty much no change were all equally likely. Without a majority Mrs May finds herself in a similar position to John Major with the only way to govern now through compromise.
The base case of no working government is that things stay much as they are. There are down sides, but from an investment point of view no news is good news and the muted reaction of the markets this morning confirms this. Brexit negotiations could be awkward, but again the potential for surprise is limited. If the clock ticks down on Article 50 and we leave the EU and the single market, this is already priced in (the fall in sterling post referendum).
If article 50 is withdrawn to buy some more time, then things stay as they are. While there are long term consequences, we find ourselves with little to do about it this morning.
Read this weeks Full Market Commentary below.