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Investing

FTSE 100 pulls back from early gains after Trump’s victory

Published by Jessica Weisman-Pitts

Posted on November 6, 2024

Featured image for article about Investing

By Nikhil Sharma and Sruthi Shankar

(Reuters) -The UK’s benchmark FTSE 100 slipped on Wednesday as losses in shares of homebuilders and precious miners countered an upbeat global market sentiment following Republican Donald Trump’s election as U.S. president.

The blue-chip FTSE 100 was down 0.1%, while the FTSE 250 midcap index rose 0.3%. Both indexes had rallied more than 1% earlier in the session.

Trump was elected president, capping a remarkable comeback four years after he was voted out of the White House and ushering in a new American leadership likely to test democratic institutions at home and relations abroad.

U.S. indexes surged in anticipation of looser regulations and lower corporate taxes in the U.S., but expectations of higher tariffs under a Trump presidency dented a basket of currencies, including the euro and the pound, as well as European shares.

The impact of higher inflation on corporate profit margins, and how interest rates might not come down as fast as previously expected, are real risks for investors to consider once the dust settles,” said Russ Mould, investment director at AJ Bell.

Trump’s victory gave a push to defence stocks, given his warnings that he would scale back U.S. military support. The FTSE 350 aerospace and defence sector rose 3.4%.

Persimmon’s shares fell 8.6% after the homebuilder flagged concerns about higher costs emerging in price negotiations for 2025, dragging the housebuilder index lower by 4.1%.

Precious metals and mining shares fell 2.3% as gold prices retreated. [GOL/]

Ashtead jumped 5.5% on expectations that a Trump victory would benefit the second-biggest equipment-rental firm in the United States.

Marks & Spencer climbed 3.8% as the retailer forecast “further progress” in the rest of its financial year after reporting a better-than-expected 17.2% rise in first-half profit.

Focus now shifts to the Bank of England’s monetary policy decision on Thursday, where a 25-basis-point rate cut is widely expected. The U.S Federal Reserve’s rate decision is also due on Thursday.

(Reporting by Sruthi Shankar and Nikhil Sharma in Bengaluru; Editing by Shinjini Ganguli and Rod Nickel)