Donald Trump victory prospects at the US Election sends shares tumbling

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The prospect of Donald Trump in the White House caused panic in the City today as jitters in the final days of the US election race set the FTSE 100 on course for its worst week in 10 months.

London’s blue-chip index dived 92.14 points, or 1.4%, to 6698.37 today and 4.2% over the week — its worst since early January — as the Footsie racked up its fifth consecutive day in the red.

Equities on the Continent were also down, with the Stoxx Europe 600, an index of the biggest listed businesses in Europe, sliding 1% to 328.29.

“What started as a few jitters morphed into a full-on panic attack today, with the European indices plunging at the prospect of Trump moving into the White House,” said Connor Campbell at Spreadex.

The volatility index, which is seen as a measure of fear in the market, last night hit its highest level since the aftermath of the Brexit vote.

Even the FTSE 250, the more UK-focused index which has benefited from a stronger pound this week, slumped 304.73 points, or 1.7%, to 17,277.18 today after yesterday’s Brexit-inspired rise.

The mid-cap index has fallen more than 2% this week.

Neil Wilson, market analyst at ETX Capital, said: “With Donald Trump having closed the gap on Hillary Clinton, the election result is too close to call and markets are on a knife-edge.

“There is a definite sense we’re heading for a Brexit-like event — if Trump wins, there could be a sharper sell-off in risky assets such as stocks and the US dollar. If Clinton wins, a rally is on the cards.”

The FTSE 100, made up of global companies that generate the bulk of their earnings in US dollars, has also been hit by a stronger pound, which was poised for its best week since March. 

Sterling rose another 0.38 cent to $1.2485 after yesterday’s big gains — putting the currency on course for a gain of more than 2% on the week. It comes in the wake of yesterday’s court ruling that MPs could have a say on the triggering of Brexit talks, as well as higher inflation forecasts from the Bank of England.

Parliament being allowed to influence Article 50 negotiations has been seen as curbing the damage which might be done by a “hard” Brexit.

The Bank’s Deputy Governor Ben Broadbent (pictured), said today that he “wouldn’t want to exaggerate the pain” from higher inflation and denied the Bank was mistaken to cut rates in August.

“I still think the stance of monetary policy is appropriate,” he added.

Source Article from http://www.standard.co.uk/business/trump-victory-prospects-send-shares-tumbling-a3387331.html

November 5, 2016 |
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