The past month has been tough for UK shareholders. The FTSE 100 is down 4.4%, versus a 4% rise for the S&P 500 and a 7.2% leap for the tech-heavy Nasdaq Composite. Also, the pound has lost 1.4% against the US dollar, while the prices of gilts (UK government bonds) have dived. Now, some investors fear that losing Sir Keir Starmer as UK prime minister might trigger a stock-market crash. How real is these worry?
Starmergeddon
Local elections on Thursday, 7 May shook the British political landscape. Overnight, the ruling Labour party lost almost 1,500 seats, with the opposition Conservatives losing over 560 seats. Meanwhile, Reform UK picked up over 1,450 new seats, upending the UK’s traditional two-party political system.
With global asset prices at record highs, investors worry about uncertainty. In the UK, former minister Wes Streeting and ex-MP Andy Burnham plan to stand against Starmer in an upcoming Labour leadership election. For a few months, this will make British politics even more volatile, generating fresh concerns for investors.
Bond woes
Since the lows of 27 February, UK gilt yields have leapt. For example, the 10-year gilt yield has shot up from 4.234% to 5.182% a year. However, this is still below 2026’s high of 5.234%, hit on 23 April. This tells us that UK and international investors are demanding higher yearly returns to buy the UK’s national debt.
That said, I’m not convinced that falling gilt prices and a weaker pound are entirely the fault of the Labour government. For instance, the 30-year US Treasury yield just leapt above 5% for the first time since 2007.
For me, recent market movements and volatility have global causes. In particular, the US-Iran war since 28 February has sent energy prices skyrocketing. This pushes up inflation and living costs, hitting consumers and borrowers worldwide. In addition, global interest rates were expected to fall this year, but now look set to rise.
Thus, to answer the question in my headline: no, I don’t expect the UK’s latest political ructions to trigger a stock market crash. But with US tech stocks in particular looking priced for perfection, almost anything might burst this potential bubble.
A FTSE 100 survivor
If the UK were to undergo a stock-market crash or harsh recession, most London-listed stocks would slide. Even so, if I had to choose a ‘share for all seasons’ — one long-term survivor — it would likely be Unilever (LSE: ULVR). Why Unilever?
First, this a big business, with its £92.2bn market value ranking it at #7 in the FTSE 100. Second, Unilever shares have endured their own crash, diving 23.9% from their 2026 high of 5,526p on 24 February to close at 4,207p on 15 April.
Third, after this price fall, the shares offer a market-beating dividend yield of 4% a year (versus 3.1% a year for the wider FTSE 100). Fourth, Unilever has global scale, selling 400+ different brands in over 190 countries.
Lastly, my family portfolio owns Unilever stock, having bought our stake for 4,122.2p a share in August 2023. By reinvesting our dividends into more shares, we have boosted our returns from this stock. Of course, any global downturn would surely hit this group’s revenues, profits, and cash flow — and perhaps its share price. Yet I hope for decent future gains!
Cliff D’Arcy has an economic interest in Unilever.
