European markets rise after Democrats head for victory in Georgia
Shares have soared in Europe as election results from the US state of Georgia indicate that the Democrats might take charge of the country’s Senate.
London’s top index, the FTSE 100, soared as high as 6,795 points at a little past midday on Wednesday, up 2.8%, while its counterparts in France and Germany were both up by around 1%.
Traders are largely looking across the pond, where overnight results from two Senate run-off races both seem to be falling for the Democratic Party.
The Associated Press has already called one of the two races for Raphael Warnock, with about 98% of the votes counted. Mr Warnock’s fellow Democrat Jon Ossoff is also ahead in his race.
The two run-off elections will prove vital to the opening years of President-elect Joe Biden’s chances of pushing through his policies.
With victory in both, Democrats will gain control over the Senate. Added to their control of the White House and the House of Representatives, it will allow Mr Biden considerable space to act.
“The Democrats were in striking distance of full control of the machinery of government in the US on Wednesday, upending the market’s consensus view on the likely outcome and potentially disturbing the status quo,” said AJ Bell investment director Russ Mould.
With the Democrats in control in Washington, tech giants such as Amazon, Apple, Facebook and Alphabet might be vulnerable to antitrust law changes to break their chokehold, Mr Mould said.
He added: “Investors had seemed to be quite comfortable with the ascension of Joe Biden to the White House and a divided Congress – welcoming an end to some of the unpredictability of the Trump era but also noting a Republican-controlled Senate would prevent Biden from implementing more radical elements of his agenda.”
In London it was the banks, miners and oil giants that fared the best, with only a handful of stocks, including Aveva and Bunzl, in the red on the FTSE 100.
“Markets seem to assume more Democrat control means more stimulus, expansionary fiscal policy, more infrastructure spending and more Treasury issuance, which favours value stocks over growth,” said Markets.com analyst Neil Wilson.
“Financials and energy should be the winners and this is at least what we are seeing in London today.”