The FTSE 100 joined European peers in the red on Wednesday, while the US hit new highs following Donald Trump’s win in the presidential election.
The FTSE 100 index closed down 5.71 points, or 0.1%, at 8,166.68. It had earlier hit an intra-day high of 8,301.78.
The FTSE 250 ended up 76.66 points, 0.4%, at 20,446.70, and the AIM All-Share rose 2.75 points, 0.3%, at 739.04.
The Cboe UK 100 ended slightly lower at 818.40, the Cboe UK 250 closed down 0.1% at 18,012.48, but the Cboe Small Companies ended up 0.2% at 16,407.40.
Across the pond, stocks soared. At the time of the London close, the DJIA was up 3.2%, the S&P 500 was 2.1% higher, and the Nasdaq Composite rose 2.4%. All three hit record intra-day highs.
Donald Trump’s re-election as US president sent shock waves through financial markets, with gains for the dollar and bitcoin.
In what appears to be a conclusive victory, Trump defended the Red Wall states North Carolina, Georgia and Arizona, while picking up states in the Democratic Blue Wall, crucially in Pennsylvania, along with Wisconsin and Michigan.
The economy was seen as the most important issue for voters in the swing states, according to polls, and the political headwind of only recently cooling inflation and still-high interest rates proved too great for Vice President Kamala Harris to overcome.
There was a strong chance that the Republicans will win a trifecta, gaining control of the Senate as well as the White House, while retaining its majority in the House of Representatives.
Peter Esho of Esho Capital said a clean sweep would be a ‘game changer’.
‘The markets are scrambling to figure out what happens next, but for the time being, the market is pricing in a higher growth and higher inflation outlook.’
Emmanuel Cau at Barclays noted a key concern for investors had been a contested election and the lingering uncertainty this would have caused.
‘With a clear result, this risk has come down, in our view,’ he added.
With Trump’s win, the ’Trump trade’ played out.
Analysts at Rabobank noted the trade has been based around the expectation that a second Trump presidency would hike tariffs, make tax cuts permanent, and strip back government regulation of business, all of which could boost US growth and inflation in the first instance.
The pound was quoted at $1.2877 at the London equities close on Wednesday, compared to $1.3003 at the close on Tuesday.
The euro stood at $1.0728, down against $1.0917 at the same time on Tuesday. Against the yen, the dollar was trading at JP¥154.48, up compared to JP¥152.08 late Tuesday.
Tesla soared 13%. Elon Musk shared a photo on his social media platform X showing him with Trump at an election watch party in Florida, and the Republican candidate singled him out during a celebratory speech.
‘We have a new star, a star is born: Elon,’ Trump said, adding: ‘He’s a character, he’s a special guy, he’s a super genius.’
Trump said during the campaign that, if he won the White House, he would install the tech billionaire at the head of a government efficiency commission to eliminate ‘trillions’ of dollars in wasteful spending.
Trump plans to impose tariffs on imported goods, a potential win for Musk’s Tesla. However, it runs the risk of sparking a trade war with China, a key market for Tesla and other auto makers.
Reflecting the possible tariffs, shares in European car makers slumped. BMW fell 6.6%, Volkswagen declined 4.3% and Mercedes-Benz slid 6.4%.
These falls reflected a more cautious mood in Europe. The CAC 40 in Paris fell 0.5% while the Dax in Frankfurt tumbled 1.1%.
Goldman Sachs expects Trump’s election to dent economic growth in the UK and Europe.
‘First, and most importantly, renewed trade tensions are likely to weigh materially on growth,’ Goldman said, noting the tariff proposals.
Second Trump’s re-election will likely entail renewed defence spending and security pressures for Europe, the broker added.
And, third ‘we expect small net spillovers from shifts in US macro policy and financial conditions.’
‘Taken together, our analysis points to a 0.5% hit to real GDP in the Euro area, ranging from 0.6% in Germany to 0.3% in Italy, with a moderate 0.4% hit to the UK,’ Goldman said.
Among the top performers in the FTSE 100 in London were firms heavily weighted to the US.
Ashtead, the industrial equipment rental company, rose 5.6%. In September, the firm placed particular emphasis on projects in North America, and on its ’Sunbelt 4.0’ strategic growth plan, which launched in April.
‘In North America, the increasing proportion of mega projects and the strength of our Specialty businesses has more than offset the lower activity levels in local commercial construction markets,’ its Chief Executive Brendan Horgan explained.
Other stocks to benefit included Intercontinental Hotels Group, up 5.2%, pest control company Rentokil Initial which has a big US presence, up 1.6% and gambling firm Entain, up 3.0%, which exposure to the US through its 50/50 joint venture BetMGM.
Heading lower, Persimmon fell 7.8%.
The York, England-based housebuilder said it delivered a net private sales rate per outlet per week of 0.70 for the period between July 1 and November 3, which was up 37% from 0.51 a year before. Excluding bulk sales, the net private sales rate per outlet was up 30% to 0.61 from 0.47.
But RBC Capital Markets analyst Anthony Coding said: ‘The unspoken or indirect message to analysts in today’s Q3 trading update was ’your numbers are too high’.’
‘We, and no doubt others, are trimming numbers today because build costs are higher than expected, and following the UK Budget National Insurance costs for the Group will rise. Our concern is that the ’nuanced’ trading statement is signalling that in the future Persimmon’s returns will be structurally lower than they were in the past.’
Other builders weakened as expectations of lower economic growth and a slower pace of rate cuts weighed.
Deutsche Bank’s Sanjay Raja with budget uncertainty unwinding, and households and businesses having to grapple with the aftermath of significant tax hikes, geopolitical uncertainty is likely to take over from here.
‘Put bluntly, economic uncertainty is here to stay.’
Taylor Wimpey fell 4.1%, Berkeley Group fell 3.1% and Vistry fell 2.5%.
Elsewhere, Smith & Nephew fell 4.0% as Berenberg downgraded to ’hold’ from ’buy’, while BT slid 3.6% ahead of half-year results on Thursday.
Brent oil was quoted at $75.18 a barrel at the London equities close on Wednesday, down from $76.10 late Tuesday.
The price of gold slumped to $2,665.82 an ounce at the London equities close on Wednesday against $2,736.94 at the close on Tuesday.
Thursday’s local corporate calendar sees half-year results from telecommunications firm BT and grocer J Sainsbury. Trading statements are due from housebuilder Taylor Wimpey and engineering firm Rolls-Royce.
The global economic diary sees interest rate decisions in the UK and the US.
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