European shares advance as Trump elected US president

7:29 am Wednesday, November 06th, 2024

By Shashwat Chauhan

(Reuters) -European shares jumped more than 1% on Wednesday, tracking a rise in U.S. stock futures, as Donald Trump was elected U.S. president and Republicans took control of at least one chamber of Congress.

Trump recaptured the White House by securing more than the 270 Electoral College votes needed to win the presidency, Edison Research projected.

The pan-European STOXX 600 added 1.2%, though off session highs, while futures tracking the S&P 500 jumped more than 2%.

The jump in S&P futures prompted some catch-up buying in European equities, said Jochen Stanzl, chief market analyst at CMC Markets, Germany.

“We hope that not everything is going to be as bad as it could be for Europe and for Germany with regards to what Trump is going to do.”

The former U.S. President had vowed to impose a 10% tariff on imports from all countries if he won, and said the European Union would have to “pay a big price” for not buying enough American exports.

Popular “Trump Trades” – stocks which could benefit or come under pressure from a Trump presidency – were on the move on Wednesday.

“Investors have been pausing (recently) when it comes to the Trump trade, but they are fully installing it right now,” said CMC Markets’ Stanzl.

Trump is seen as bullish for European defence stocks, given his warnings to scale back U.S. military support in the region and force NATO members to spend 2% or more of their GDP on defence.

An index of Europe’s aerospace and defence companies jumped 3.1% to a record high.

Shares of European renewable energy companies came under pressure. Trump has vowed to scrap offshore wind projects through an executive order on his first day in office.

Oersted and Vestas fell 9.1% and 8.8%, respectively, while the broader utilities sector was down 1.2%.

A gauge of STOXX volatility fell to its lowest level since Sept. 27. It was last at 14.95 points.

Among earnings-driven moves, Novo Nordisk added 5% after the weight-loss and diabetes drugmaker reported better-than-expected quarterly sales of its popular Wegovy weight-loss drug and narrowed its 2024 outlook.

BMW slipped 6.9% after the German automaker reported a 61% drop in its quarterly third-quarter profit, missing analyst expectations.

The U.S. Federal Reserve and the Bank of England’s rate decisions are expected later in the week.

(Reporting by Shashwat Chauhan in Bengaluru; Editing by Saumyadeb Chakrabarty, Sonia Cheema and Devika Syamnath)