FTSE regathers itself from early Trump shock

Stockmarket-Stock-Market-FTSE-Performance-700x450The FTSE has gained ground on sharp losses it suffered this morning following the shock election of Donald Trump as the US president, with mining companies being the big winners from the UK market so far.

The large-cap index initially dropped 2.1 per cent, but was 0.5 per cent down later in the morning.

Asset managers and other financial services were among some of the early fallers. Aviva, Schroders and Hargreaves Lansdown saw initial losses above 4 per cent, but have since gained ground.

Sterling is currently trading at $1.25427.

Architas multi manager Nathan Sweeney says Trump’s victory speech helped sooth markets as he softened his rhetoric “perhaps now switching into Presidential rather than campaigning mode”.

“This should result in a less dramatic outcome for equities, currencies and bond markets than many investment commentators had expected.”

Hargreaves Lansdown senior analyst Laith Khalaf points out the FTSE 250 has bounced back into positive territory.

Mining companies are winners on the Footsie so far, in particular Fresnillo. Shares in the precious metal miner have risen by almost 10 per cent.

“That’s because the price of its products, gold and silver, have risen, while the costs of its mining operations in Mexico, have fallen thanks to the drop in the peso.

“Pharmaceutical companies have also seen their share prices rise, as Clinton’s attacks on drug pricing are now no longer in the ring.”

Darius McDermott, managing director of FundCalibre says “whether the fall is for one, two or three days, or manifests itself into something more worrying is another question.

“My best guess is we’ll see a short period of volatility before markets steady.”

Regarding the US market, McDermott says: “The US market has been rising steadily for a long time now and many companies’ valuations are very expensive.

“Any volatility could create opportunities to buy these companies at more reasonable prices. This could be a time to put cash to work.”