Above all, markets crave certainty. Political instability inhibits investment and reduces the appetite for risk. Many business leaders would have viewed the general election result as a significant blow to those wanting the UK to withdraw from the EU single market and customs union. It also still leaves us with the very real prospect of an incoming Labour government - if another election is called in the not-too-distant future - committed to a seven percentage point increase in corporation tax and the re-nationalisation of the UK's energy companies and rail industry.
Whatever your views on the desirability of these proposals, it's difficult to imagine that the mere prospect of such radical measures won't stall near-term corporate decision-making. This corporate inertia could well be matched by legislative paralysis in Westminster, so it's conceivable that by the end of the year UK voters may be asked to return to polling booths to try to clear the way for a majority in the lower house.
Beyond making the actual business of governance somewhat problematic, it's difficult to predict how the formation of a minority government might play with the UK equity market. It's fair to say that traders have been more circumspect since overselling the market in the immediate aftermath of the EU referendum, but even if Theresa May does manage to cobble together a working arrangement with the Democratic Unionist Party, history suggests that it will be a shortlived affair.
There were three minority governments in the first half of the 20th century, the earliest of which, Herbert Asquith's Liberal administration, was propped up by Irish Nationalists right through to the formation of a coalition government by the main parties during the Great War. The support of the Nationalists was predicated on the understanding that Home Rule would eventually pass into law, which seems slightly ironic in view of who Theresa May is getting into bed with this time around.
The other two hung parliaments ended with minority governments led by Labour's Ramsay MacDonald, although a vote of no-confidence and a run on the pound resulted in: a) a drubbing at the ballot box by Stanley Baldwin's Tories; b) the establishment of a national unity government that has tarnished MacDonald's reputation in the Labour movement through to the present day.
These crises either played out against pushes for radical reform, including in the case of Asquith a proposed 'super tax' on the wealthy, or in the face of social convulsions brought about by war and the Great Depression. On the economic front, matters were scarcely more favourable in 1974 when Harold Wilson's Labour formed a minority government, after the Conservative Prime Minister Edward Heath failed to broker deals with both the Liberals and Ulster loyalists. The latter arrangement would have meant extending the Tory whip to the founder of the Democratic Unionist movement Ian Paisley.
The parallels between that period and the bind that Mrs May now finds herself in provide a stark illustration of how difficult life is for a government that can't control the House of Commons.
In the lead-up to the Wilson minority government through to its dissolution, the FTSE All-Share index contracted by around 35 per cent; the severity of that decline not only a function of wider economic malaise, but also a reflection of a government compelled to make concessions and seek a consensus even when introducing simple legislative changes. However, it's worth noting that since the FTSE All-Share's inception in the early 1960s, it has only registered one point-to-point reversal over the tenure of a prime minister - Gordon Brown.
