FTSE 100 surges as Trump presidency boosts US-focused firms
The FTSE 100 surged at the open today, and sterling crashed as traders digested how Donald Trump’s presidency will impact the global economy and the UK.
London’s flagship index was trading up over 1.4 per cent in early trading, pushed higher by a near six per cent jump for the US-focused construction equipment rental firm Ashtead and sharp rises for Barclays and IHG.
Ashtead, which makes some 85 per cent of its revenue in the US and has reportedly considered swapping its listing to New York in the past, is likely to benefit from a Trump-led construction drive.
“Trump did not mention tariffs in his victory speech, and this is why we are seeing UK firms with US exposure rallying on Wednesday,” said Kathleen Brooks, research director at XTB. “A win for Trump is also seen as being good for the US economy, which is also boosting big UK companies who export to the US.”
FTSE 100 boosted by US exposure
FTSE 100 constituent Rolls Royce, a major exporter to the US, also rose around 4.5 per cent.
London’s markets are more exposed to the American economy than many European peers with some 28 per cent of revenues made in the US, according to Bloomberg Intelligence analyst Kaidi Meng.
Pharma and consumer-related companies “susceptible to drug re-pricing risks and tariff, “ Meng said today.
“While a potential 10 per cent tariff […] brings risk to UK exports, other possible impacts include drug-price renegotiation for health-care industry, wage increase and reflation risks from reshoring US manufacturing, higher defense spending and renewable energy disincentivizing,” she added.
The FTSE 250, which is more exposed to the domestic economy, was also up around two per cent.
Bill Ackman’s Pershing Square Holdings also rose nearly four per cent before 8:30am. The billionaire New York hedge fund chief has been among the leading business voices backing a Trump presidency.
The pound has taken a steep dive to 1.28 against the dollar however as investors rush in to so-called Trump trades.
“The dollar has gained ground against a basket of currencies. Investors are bracing for tariffs and a clamp down on immigration, policies considered to be inflationary which are likely to mean interest rates may be more elevated in the years to come,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.