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The FTSE 100 has passed the 6,000 mark for the first time in a month as equity markets rebound after Joe Biden’s election victory in the United States.
It followed overnight gains in Asia, with Japan’s Nikkei hitting a 29-year high after confirmation of the result over the weekend.
The FTSE 100 rose as much as 1.7%, or more than 100 points, in early trading, while indices in France and Germany saw similar increases.
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Mr biden defeat of Donald Trump it has allayed fears about the continuation of a damaging trade war between the United States and China, the world’s two largest economies.
China’s Nikkei and Shanghai Composite each increased by about 2%, while Hong Kong’s Hang Seng and South Korea’s Kospi added just over 1% each.
Markets had already enjoyed a strong run last week as it seemed increasingly likely that Biden was on his way to racking up enough electoral college votes to defeat Trump.
That had helped them bounce back after a recent period in which sentiment has been weakened by fears about the impact of rising coronavirus cases and new lockdowns.
Hopes that the new US administration can enact a new round of economic stimulus have been dashed by the likelihood that Congress will remain divided.
But on the other hand, the absence of a “blue wave” bringing Democrats to power in both the White House and the Senate means that it seems less likely that investors will have to worry about higher taxes and stricter regulation. for some large companies.
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There is also the expectation that the US Federal Reserve, the US central bank, will continue to provide much-needed monetary policy assistance to the coronavirus-hit economy.
The Fed has already cut interest rates and injected trillions of dollars into the economy.
Richard Hunter, Head of Markets at Interactive Investor, said: “This is the first opportunity for markets to react to the Biden news this weekend and the first signs are promising.
“Asian markets had an energetic and positive session in hopes of a less conflictual relationship between the United States and China in the immediate future.
“Despite the likelihood that the election result will be contested, the fact that Congress is divided is now being discounted, which is seen as a tailwind for markets, as radical changes are more difficult to introduce “.
Jeffrey Halley, Senior Market Analyst for Asia Pacific at OANDA, said: “Equity markets are on fire today after the US election that was called for Joe Biden.
“Biden is perceived to be more trade-friendly, and with Republicans indicating an unwillingness to back large-scale fiscal stimulus, further monetary easing is looming.”
