The FTSE 100 held on to its gains today after yesterday’s 3.5% surge with overall sentiment strong, despite shocking scenes in Washington last night.
Towards close the UK’s blue-chip index had added 19 points or 0.3% to 6,861 after the US S&P 500 opened 0.9% higher and the Nasdaq technology index leaped 1.4% after Congress last night certified the election of the Democrat Joe Biden as the next US president.
This was achieved after armed supporters of president Donald Trump (pictured) disrupted the lawmakers in an ‘insurrection’ on Capitol Hill that saw one woman shot dead by police and three others die from ‘medical emergencies’.
Despite the threat of more political violence before Biden takes office on 21 January – with senior figures calling for Trump’s removal under the constitution’s 25th Amendment after inciting the mob – markets were cheered by the Democrats winning both seats in yesterday’s Georgia run-off Senate elections.
This gives Biden control of both chambers of Congress, including the House of Representatives, which should smooth the path for a bigger stimulus package for the battered US economy, where weekly jobless figures dipped to 787,000 but remain high.
Tomorrow’s non-farm payrolls figures are not expected to show much improvement with economists predicting the US economy created just 68,000 net new jobs last month and that unemployment rate ticked up 0.1% to 6.8%.
In Europe the French and German stock markets rose 0.8% as investors looked foward to a period of stable US leadership as countries worldwide roll out vaccines to combat coronavirus.
‘It is on the Biden government to show they can get things done – and from a market perspective that means a chunky stimulus package to compensate for the compromised bill agreed before Christmas,’ said Spreadex analyst Connor Campbell.
The positive outcome for the Democrats was ‘something of a double-edged sword’ for markets, said Richard Hunter, head of markets at Interactive Investor.
‘On one hand, the new balance of power is largely expected to result in increased fiscal stimulus and infrastructure spending, but it may also be accompanied by higher taxes and regulation,’ he said.
In London Sainsbury’s (SBRY) was the bright spot on the FTSE 100, jumping 6.5%, or 15p, to 247.5p, after the supermarket group reported strong Christmas trading, with like-for-like sales up 9.3%.
Hargreaves Lansdown analyst Susannah Streeter said the supermarket sector ‘has had to adapt quickly to the rapid change in consumer habits brought on by the pandemic’.
‘J Sainsbury’s is still on a conveyor belt of change but it’s certainly going in the right direction,’ she said. ‘Ongoing price cuts to stay competitive against its rivals are continuing, and that is likely to put pressure on margins if the bun fight for the value end of the market continues.’
Auto Trader (AUTO) reversed 4.3%, or 26p, to 583p the car classified ads publisher platform was hit by a warning of falling sales in the fresh national lockdown.
British Land (BLND) lost 2.7%, or 14p, to trade at 474p, knocked lower by a downgrade by Morgan Stanley to ‘underweight’.
Coronavirus barometer International Consolidated Airlines (IAG) dropped 1.5%, or 2.4p, to 155.7p after the Irish transport minister heaped more woes on the travel industry by stating the need for UK passengers to take a Covid-19 test before entering the country will stay in place until at least the end of January.
The FTSE 250 recovered from an early 0.4% fall to trade virtuall unchanged at 20,974.
IP Group (IPO) sank 8.8%, or 10p, to 101p after fund manager Invesco sold 61m shares in the intellectual property group.
Mitchells & Butlers (MAB) retreated 4.4%, or 10.5p, to 227p as the pubs group mulled an emergency rights issue to raise money from investors to tide it through the lockdown.
In investment company news, specialist US-focused biotech fund RTW Venture (RTW) advanced 2.8% to $2.18 after unquoted portfolio company Biomea Fusion raised $56m from investors to develop its cancer treatments.
TwentyFour Select Monthly Income (SMIF) gained 2% or 1.9p to 90.9p as the debt fund said only one shareholder had sold shares in a recent tender offer.
Rival Honeycomb (HONY) rose 1.4%, or 12.9p, to 962.9p after reporting performance is back to pre-Covid-19 levels. The fund has deployed £30m into credit assets including the acquisition of a portfolio of short-term real estate loans.
Pantheon International (PIN) moved 2.3%, or 56p, to £25.36 after the private equity investment trust said net asset value had grown 4.3% in November.
HgCapital (HGT) added 1p or 0.3% to 322p after announcing a £15.7m investment in Prophix, a Canadian-based company that produces corporate performance software for over 1,600 customers around the world.