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Share prices in the City were on course for their biggest daily gain in two months amid investor hopes that a Joe Biden victory in the US presidential election would result in a major new stimulus package.
London’s leading stock market index – the FTSE 100 – was up more than 100 points in early trading as the gloomy mood of last week faded.
The rally in share prices began overnight in the Asia-Pacific region and moved on to Europe where all the major bourses posted gains. The FTSE was up by more than 100 points by mid-morning in London and trading at its highest level in a week.
Despite the imminent start of a new nationwide lockdown in England on Thursday, financial markets believe Biden will defeat Donald Trump as part of a Democrat clean sweep of the presidency and both houses of Congress.
The City is also expecting the Bank of England to support activity with an announcement on Thursday of at least £100bn of fresh money creation through its quantitative easing programme.
Tougher lockdown measures announced by a number of European economies together with record daily infections in the US meant October fuelled the sharpest monthly sell-off in equities since March.
But despite polls suggesting a tight presidential race in some of the key swing states, markets were anticipating a clear win for Biden.
“It’s quite surprising when you’ve got such a massive event-driven week, you can see a little bit of apprehension at the start of the week, but [this rally] has been quite the opposite,” said Craig Erlam, a senior market analyst at Oanda in London.
Erlam added that a smooth US presidential election, a vaccine for Covid-19 and a Brexit deal could all be positive for financial markets over the coming weeks.
Fiona Cincotta, an analyst at Gain Capital, said: “Should Joe Biden manage to win the race, a blue wave, which includes control of the Senate, is needed for the markets to really get excited about stimulus. A Republican-controlled Senate indicates more gridlock to come and the markets will need to drastically scale back stimulus expectations.”
Source: The Guardian
Keyword: Stock markets soar as City traders anticipate Joe Biden win | Business