Wall Street gains as Trump win reassures investors

Early turbulence in financial markets gave way to calm and then gains later on Wednesday, as investors reassessed the consequences of Donald Trump’s surprise election.

European shares surged, driven by gains among pharmaceutical, biotech and financial stocks. The pan-European Stoxx 600 index had fallen as much as 2.4 per cent in early trade on uncertainty over Mr Trump’s policy positions but the index recovered to end up 1.5 per cent.

Traders cited Trump’s emollient acceptance speech and later in the session investors focused on his plans to boost infrastructure spending and cut corporate tax, both moves seen as positive for equities.

Dublin

The Iseq had a strong day, led by its largest stock, building materials group CRH.

The index closed up 2.4 per cent as the cement-maker advanced more than 8 per cent, extending its gains over the course of the session amid buyer interest. CRH’s operations in the US are in line to benefit from the Republican presidency if it follows through on its commitments to ramp up infrastructure spending. The share closed at a price of €32.20, a nine-year high for the stock.

Ryanair advanced 1.8 per cent to €13.90, sealing the Iseq's outperformance relative to the major European indices. Building materials group Kingspan also gained, adding 2.4 per cent to finish on €23.56.

Paddy Power Betfair fell 1 per cent to €102.45, while paper and packaging group Smurfit Kappa dropped 2.75 per cent to €19.79 and the Green Real Estate Investment Trust (Reit) fell 2 per cent to €1.31.

London

The FTSE 100 ended 1 per cent higher after a volatile session that saw the index slumping 2 per cent in early trading following Trump’s victory.

Mining companies tracked a sharp rise in prices of gold. The UK mining index, which includes precious and base metals companies, surged 5.9 per cent to its highest since mid-2015, boosted by a 6.8 to 10.7 per cent jump in Fresnillo, Antofagasta and Glencore.

Healthcare stocks spiked in a relief rally. Shares in Hikma, Shire, Astrazeneca and GlaxoSmithKline gained 2.7 to 8.3 per cent. Pharma stocks had been losing ground before the election on worries that a Clinton presidency would put pressure on drug prices.

Sainsbury’s fell 6.6 per cent after reporting an underwhelming set of results. The supermarket reported a third straight decline in first-half profit.

Tate & Lyle slumped 11 per cent, weighed down by a downgrade to underperform from neutral by analysts at Exane, which said its exposure to Mexico will weigh on profits and sentiment.

Europe

The German and French markets shook off early losses to finish in positive territory. In Frankfurt, the Dax rose 1.6 per cent, while the Cac 40 in Paris closed up 1.5 per cent. Italian stocks underperformed, with the FTSE MIB down 0.1 per cent.

Europe’s Aerospace and Defence Index surged 4.4 per cent on expectations that Trump’s presidency would trigger a rise in defence spending in European countries. Trump has suggested the United States might not be willing to protect Nato allies that failed to spend enough on their own defence.

Among top fallers on Wednesday was Spanish bank BBVA, down 6.1 per cent, hit by a slump in the Mexican peso after Trump’s victory. Among European banks, BBVA has the biggest Mexican revenue exposure of all European banks.

Shares in Vestas, the world's biggest wind turbine maker, was the biggest Stoxx loser, as renewable stocks were hit by fears over Trump's aim to promote oil and gas drilling and revive the US coal mining industry.

US

Wall Street stocks rose in heavy trading, with the S&P 500 Index near a one-month high, as shares of banks to heavy equipment operators rallied amid speculation Trump will pursue business-friendly policies after his surprise election as president.

Pfizer and Merck jumped at least 6.8 per cent, while a fund tracking biotech shares in the Nasdaq Composite Index rallied the most in eight years, as the sector was judged to have escaped closer regulatory scrutiny from a Clinton administration.

Companies gaining on Trump's plans to boost infrastructure spending included Caterpillar, which added 7.2 per cent, while Vulcan Materials climbed 11 per cent to an all-time high.

Companies potentially sensitive to Trump's trade plans retreated, with Apple dropping 1.1 per cent, and consumer stocks Coca-Cola and Procter & Gamble decreasing at least 1.2 per cent.

(Additional reporting: Bloomberg/Reuters)