6th Nov 2024 08:54
(Alliance News) - Stock prices in London opened higher on Wednesday morning, with the dollar surging as investors bet on Trump's increasingly likely US election win, and as composite PMI releases from France and Germany are coming in.
Donald Trump claimed victory in the US election, with traders ramping up bets on fresh tax cuts, tariffs, and rising inflation.
While polls had shown the race on a knife edge, the Republican fared far better than his Democratic opponent Vice President Kamala Harris as electoral college results rolled in.
Also in the US, Republicans wrested the Senate from Democratic control while the congressional election looks close.
UK Prime Minister Keir Starmer reacted: "Congratulations president-elect Trump on your historic election victory. I look forward to working with you in the years ahead.
He continued: "From growth and security to innovation and tech, I know that the UK-US special relationship will continue to prosper on both sides of the Atlantic for years to come."
"As the dollar rises, countries which import commodities priced in USD may also see prices increases, which will either need to be absorbed by companies or passed onto customers...there may be more demand for the dollar as it is considered to be a safe haven," commented Hargreaves Lansdown's Susannah Streeter. "This could be counter-productive to efforts to increase exports from the US as the stronger dollar is likely to make products of US exporters less competitive globally.
"When it comes to Europe, an increase in tariffs imposed on exports is likely to cause some pain, but given the dollar is also strengthening and is likely to be beefed up even further, due to inflationary pressures, the currency changes may help British and European firms maintain their competitiveness."
The FTSE 100 index opened up 116.58 points, 1.4%, at 8,288.97. The FTSE 250 was up 405.20 points, 2.0%, at 20,775.24, and the AIM All-Share was up 5.53 points, 0.8%, at 741.82.
Beazley was among the FTSE 100's biggest winners, rising 4.2%.
The insurer said in its latest trading update that it is on track for 2024 guidance, with insurance written premiums in the first nine months of the year up 7% annually to USD4.63 billion from USD4.33 billion.
Persimmon led the laggers, down 4.6%.
This was despite the housebuilder saying it is trading in line with expectations, and is on track to grow completions to 10,500.
Its current forward sales position rose on-year to GBP2.02 billion as of Sunday, although the number of homes delivered in the third quarter fell to 1,416 from 1,439 last year. Persimmon also said it remains optimistic about its growth prospects and the timing of future interest rates.
Marks & Spencers meanwhile jumped 4.2%, close behind Beazley on the index.
The retailer said its half-year pretax profit rose 20% to GBP391.9 million from GBP325.6 million the year before, while revenue rose 5.7% to GBP6.48 billion. The interim dividend was unchanged at 1p per share.
The Cboe UK 100 was up 1.5% at 830.90, the Cboe UK 250 was up 1.5% at 18,287.75, and the Cboe Small Companies was flat at 16,373.69.
With the Bank of England scheduled to make its interest rate call on Thursday, alongside the US Federal Reserve, Lloyds commented: "One of the unknowns about how the [UK] Budget plays out is whether or not the boost to demand from extra government spending eclipses the headwind to the labour market...The [Office for Budgetary Responsibility's] view is that it does and that it likely stops the BoE cutting rates as much as it otherwise would have done.
"It is probably too much to expect that the [monetary policy committee] come to a definitive view on this as soon as tomorrow's decision, so the likelihood is that the existing guidance of a 'gradual approach' to cutting rates is retained in some form or another.
Also in UK news, new Conservative Party leader Kemi Badenoch is preparing to clash with Starmer at her first Prime Minister's Questions.
In European equities on Wednesday, the CAC 40 in Paris was up 1.0%, while the DAX 40 in Frankfurt was up 1.0%.
The pound was quoted at USD1.2875 early on Wednesday in London, lower compared to USD1.3003 at the equities close on Tuesday. The euro stood at USD1.0742, lower against USD1.0917. Against the yen, the dollar was trading at JPY154.03, higher compared to JPY152.08.
In Asia on Wednesday, the Nikkei 225 index in Tokyo was up 2.6%. In China, the Shanghai Composite was down 0.1%, while the Hang Seng index in Hong Kong was down 2.3%. The S&P/ASX 200 in Sydney closed up 0.8%.
In the US on Tuesday, Wall Street ended in the green, with the Dow Jones Industrial Average up 1.0%, the S&P 500up 1.2% and the Nasdaq Composite up 1.4%.
Rabobank noted: "Strategically, much still depends on whether the Republicans take the House. If they do not, we see the odds tilted toward a bear flattening of the US curve (as Trump can raise tariffs but not push through his spending plans nor fill the FOMC with loyal appointees).
"As noted, though, the initial market response rarely sets the tone for the longer term and the market has yet to coalesce around a consistent narrative."
Brent oil was quoted at USD74.12 a barrel early in London on Wednesday, down from USD76.10 late Tuesday.
"Oil prices have been on a falling trend since a while now," Swissquote's Ipek Ozkardeskaya said, noting that "OPEC's production cuts have been countered by increased production elsewhere. The US for example is pumping like there is no tomorrow (and Trump vows to keep it that way).
"Under these circumstances, Saudi, which is the backbone of the OPEC policy, will be increasingly tempted to give up on the production cut strategy and adopt a market share focus to increase its revenue by selling more oil with cheap prices. That, to me, could weaken the OPEC-encouraged oil bulls' hands in the medium run."
Gold was quoted at USD2,732.58 an ounce, lower against USD2,736.94.
Still to come on Wednesday's economic calendar, as well as the composite PMI data from across Europe, there is a UK construction PMI read this morning.
By Emma Curzon, Alliance News reporter
Comments and questions to [email protected]
Copyright 2024 Alliance News Ltd. All Rights Reserved.