4th Nov 2026 17:02
(Alliance News) - Stocks soared in London on Wednesday, along with European and US peers, as investors weighed a decisive win for the Democrats over President Donald Trump's Republicans in the US midterm elections.
The FTSE 100 index closed up 190.78 points, 1.8%, at 10,829.21. The FTSE 250 ended 240.78 points higher, 1.0%, at 24,915.69, and the AIM all-share climbed 6.29 points, 0.8%, at 760.89.
The Cboe UK 100 ended up 1.8% at 1,075.59, the Cboe UK 250 closed 0.9% higher at 22,044.09, and the Cboe small companies rose 1.5% to 18,830.38.
In Europe, the CAC 40 in Paris jumped 2.2%, as did the DAX 40 in Frankfurt.
The mood was similarly buoyant on Wall Street. Around the time of the London equities close on Wednesday, the Dow Jones Industrial Average was up 2.5%, the S&P 500 was 1.4% higher and the Nasdaq Composite advanced 1.5%.
The US elections saw the Democrats win the Senate and the House, taking control of Congress for the rest of Trump's presidency.
In Senate races, Democrats picked up a string of victories in Republican strongholds including Texas, South Carolina and Kansas.
Barclays Capital analyst Michael McLean said in the House, Democrats may ultimately win 258 seats, a gain of 43, which would be the largest House majority for a party since at least 2009. In the Senate, he noted Democrats are on track to gain seven to potentially nine seats.
"A seven-seat gain would produce the largest Senate majority for either party since 2015. Victories in Alaska and Mississippi would take Democrats to 56 seats, the largest majority since 2010," he explained.
McLean sees the election outcome as both ordinary and extraordinary.
"Ordinary, because large losses by the president's party are typical in second-term midterms," he said, and "extraordinary" because of "where Democrats won; reversing decades of Republican control in some states."
UBS pointed out that one important implication of the 2026 results is that Democrats winning previously reliable Republican Senate seats puts them into Democratic party control for at least six years.
UBS noted Republican majorities in the Senate the last 26 years have depended on Kansas being Republican, and South Carolina, and for the most part Texas, Iowa and North Carolina too.
"Thus, the victories this year moved those reliable seats out of Republican hands for the six year terms of those seats, making it much more difficult for Republicans win back control of the Senate in 2028 or 2030," UBS explained.
McLean at Barclays said the divided government limits the prospects for major legislation and the result likely will be "legislative gridlock".
But Kathleen Brooks, research director at trading platform XTB, pointed out that "gridlock might be bad for politics, but it is good for markets, and traditionally US indices experience a strong rally after midterm elections".
"After the recent rout in stocks, especially AI linked stocks, the stage could be set for a strong performance into year end," she suggested.
Raphael Olszyna-Marzys, international economist at J Safra Sarasin Sustainable Asset Management, said the "decisiveness" of the outcome left Donald Trump no room to contest the results, "which is clearly a good thing".
"It adds clarity to the outlook and also removes some of the risk premium that a disputed result would have placed on asset prices," he said.
Goldman Sachs expects Democrats to use fiscal deadlines to seek to limit the war with Iran, roll back selected tariffs, and reverse spending cuts enacted last year.
Democratic wins at the state and local level are likely to lead to short-term data centre moratoria, potentially affecting about 45% of planned US data centre capacity expansion, Goldman suggested.
The election results put the dollar under pressure but Matthew Ryan, head of market strategy at Ebury, cautioned against reading too much into the initial "knee-jerk" move in the greenback.
"This is not a game changer for FX and ultimately we think that any downside will prove limited," he added.
Ryan noted the outcome was largely priced in, Trump retains his veto and Treasury yields look set to stay elevated regardless.
"Congress may have turned blue, but the dollar's main drivers have not," he added.
The pound was quoted at USD1.3464 late Wednesday afternoon, up from USD1.3416 at the same time on Tuesday. Against the euro, sterling firmed to EUR1.1999 from EUR1.1986.
The euro was higher at USD1.1222 from USD1.1197 late Tuesday. Against the yen, the dollar was flat at JPY158.45 from JPY158.44.
The yield on the US 10-year Treasury was quoted at 4.92% late on Wednesday afternoon, narrowed from 4.94% on Tuesday. The yield on the US 30-year Treasury was at 5.31%, widened from 5.30%.
Elsewhere, eurozone consumer price inflation accelerated to its highest level in more than three years in October, driven by a further surge in energy costs.
According to preliminary figures from Eurostat, consumer prices rose 4.0% year-on-year in October, accelerating from 3.8% in September and matching market consensus cited by FXStreet.
The reading marked the highest annual inflation rate since September 2023.
Energy prices jumped 21% from a year earlier, accelerating from a 19% increase in September, while services inflation edged up to 3.3% from 3.2%.
Excluding energy, food, alcohol and tobacco, core consumer price inflation remained unchanged at 2.5%, also in line with market expectations.
In London, dollar weakness boosted the gold price, supporting shares in miners Fresnillo and Endeavour Mining, which ended up 7.1% and 6.2% respectively.
Gold was quoted at USD4,041.83 an ounce Wednesday, higher than USD3,933.38 on Tuesday.
Marks & Spencer jumped 6.4% as it pledged to tackle issues in its Fashion, Home & Beauty unit which held back first half performance.
The London-based clothing and food retailer reported a sharp rise in half-year pretax profit to GBP355.1 million from just GBP3.4 million a year earlier as it recovered from last year's cyber attack.
But profit in the FH&B business was below expectations and Chief Executive Stuart Machin said: "We fell short of our full potential".
"Put simply, we need to turn more of the demand we already have into profitable sales at a lower cost to serve," the CEO added.
M&S plans to improve availability, reduce lead times, improve stock flow and set up a new dedicated returns centre in Sheffield.
In a sea of green, banks were a strong feature with NatWest up 5.3%, HSBC up 4.8% and Lloyds Banking Group up 4.0%.
In the red, Weir fell 9.6% after the engineering firm said orders fell in one of its business lines and warned about short-term headwinds against its financial performance.
Defence manufacturers BAE Systems and Babcock International fell 4.2% and 0.8% with the sector seen as a loser from the 'blue wave' of Democrat wins.
RBC Capital Markets analyst Ken Herbert said: "While we continue to see bi-partisan support for elevated defence spending, we do believe the election results will lead to more budget in-fighting as Democrats are expected to push for greater non-defence funding."
Both UK-listed firms have exposure to contracts stateside.
The US election results also saw the price of Brent drop below USD100 for the first time since early October on hopes further strikes on Iran will be avoided.
Brent oil was trading at USD99.00 a barrel on Wednesday, lower than USD103.24 late Tuesday.
The biggest risers on the FTSE 100 were Fresnillo, up 162.00p at 2,448.00p, Smith & Nephew, up 72.50p at 1,190.00p, Marks & Spencer Group, up 26.50p at 440.70p, Associated British Foods, up 121.00p at 2,021.00p and Endeavour Mining, up 221.00p at 3,778.00p.
The biggest fallers on the FTSE 100 were Weir, down 252.00p at 2,378.00p, Ithaca Energy, down 22.80p at 258.20p, Computacenter, down 221.00p at 4,824.00p, BAE Systems, down 87.00p at 1,988.00p and BP, down 17.70p at 571.60p.
Thursday's global economic events calendar has the Bank of England interest rate decision, a slew of construction PMI reports including the UK at 0930 GMT, eurozone PPI data and US initial jobless claims figures.
Thursday's local corporate calendar has half-year results from telecommunications group BT and trading statements from Guinness owner Diageo, kitchen supplier Howden Joinery and retailer Next.
By Jeremy Cutler, Alliance News reporter
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