Stocks, currencies and bitcoin fired up as Trump declares victory, Marks & Spencer’s turnaround gathers pace, Wetherspoons toasts strong sales, Persimmon warns of cost pressures

“US and European markets raced ahead on projections for Donald Trump to win the US Presidential election,” says Russ Mould, investment director at AJ Bell.

“The dollar strengthened and 10-year Treasury yields jumped to 4.406% on the assumption that Trump’s policies will stoke inflation and require interest rates to stay higher for longer. That sustained the rally in US Treasuries which has been in motion since mid-September when they traded at 3.623%.

“Trump’s desire to cut taxes and make things easier for businesses to operate should in theory give a near-term tailwind to US shares, with futures prices implying a strong opening to Wall Street later. The S&P 500 is indicated to open 2% ahead and the Nasdaq up 1.7%.

“The impact of higher inflation on corporate profit margins, and how interest rates might not come down as fast as previously expected, are real risks for investors to consider once the dust settles.

“The FTSE 100 jumped 1.5% in early trading, led by a mixture of industrial, financial and pharmaceutical companies. US-focused Ashtead raced ahead on the prospect of more building work created by Trump’s desire to drive the US economy including greater manufacturing and construction work. As a hirer of construction equipment, it is a direct play on hammers and tools pounding away across the country.

“Investors who thought Kamala Harris would win might have gone all-in on renewable energy stocks given her pro-green stance, and that trade is now unwinding. Shares slumped in wind specialists Oersted and Vestas Wind Systems.

“The euro fell 1.5% against the dollar to $1.0773 on the prospect of tariffs for goods sold into the US and how that might fuel the need for greater and faster interest rate cuts by the European Central Bank.

“The threat of much greater tariffs on Chinese goods sold into the US and deteriorating relationships between the two countries under a Trump administration weighed on Asian equities including a 2.2% pullback in the Hang Seng index.

“A Trump victory shone the spotlight on his US-listed media business, sending shares in Trump Media & Technology Group up 10% in pre-market trading. It’s been a wild ride for investors in the stock as its price has gone from $50 in May to sub $13 in September and now back up again, on the verge touching $40. The share price performance has been as volatile and unpredictable as the man himself.

“Elon Musk’s status as Trump’s ally from the business community hasn’t gone unnoticed by investors who have bid up shares in Tesla by 3% in pre-market trading on the election news.

“Bitcoin is the one asset that was always going to soar if Trump returned to the White House. A brief jump to $75,281 put the cryptocurrency at a new all-time high and fired up traders to speculate when, not if, it will smash through $100,000. Trump has already declared his love of the digital currency and crypto traders now have a new narrative by which to get even more excited about where the price could go.

Marks & Spencer

“When the clothing business was badly out of fashion it was food which really sustained Marks & Spencer and it’s this part of the business which is behind today’s better-than-expected profit.

“The clothing business also delivered a robust performance and, all in all, that added up to a very decent showing from the retailer. It offered further evidence that a long-awaited turnaround for the business is gaining traction.

“The company certainly sounded in a confident mood about building on the progress it has made and taking share from its rivals. A strategy of introducing lower price lines in food has been a success and, in clothing, the company now appears to be better attuned to the appetites of shoppers.

“While initiatives like shuttering underperforming stores, opening more food outlets and making improvements to its technology and infrastructure are not rocket science they have undoubtedly delivered for the business.

“Marks & Spencer does sound a cautious tone on the impact of the Budget, which will inevitably lead to some cost inflation. The company’s financial position continues to improve with a modest reduction in net debt.”

JD Wetherspoon

“Wetherspoons may be feeling the squeeze on costs but sales are doing quite nicely. Unsurprisingly, the company has quite a lot to say about the Budget and it’s clear that any benefit from a cut in draught duty will quickly be swallowed up by higher staffing costs as the impact of the National Insurance changes and increase in the national living wage bite.

“The company continues to do well in an environment when its low-cost credentials for food and drink remain in high demand, handily outperforming the wider industry. It is opening new sites and there are reasons for optimism despite the hit from cost inflation. The test will be how much of the extra costs the company can pass on, without diluting demand.”

Persimmon

“The housebuilding sector was supposed to be in a happier place as interest rates started to come down and the property market took a turn for the better. However, the latest update from Persimmon suggests the recovery might not be as straightforward as had been imagined.

“Costs are back on the rise and the company is warning of a potential impact from the Budget on this front too. The changes to stamp duty are broadly unhelpful to the business. If property prices soften then the company and housebuilding industry are back to facing the unhelpful cocktail which saw their shares come under significant pressure in recent years. Persimmon’s margins are already below long-term averages as it is.

“Worryingly, Persimmon’s latest trading statement did not build much confidence. The hope will be that people have been holding off ahead of the Budget and will now be ready to make purchases again.”

These articles are for information purposes only and are not a personal recommendation or advice.