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London / AFP
World stock markets rallied further on Thursday, with Tokyo surging almost seven percent, on hopes Donald Trump’s plan to kickstart the US economy will succeed following his shock presidential election victory.
The dollar firmed after sliding Wednesday on worries that uncertainty over Trump’s policies would cause the Federal Reserve to hold off an interest rate rise. Haven currency the yen was a big loser Thursday, slumping to a 3.5-month low at 106.43 yen to the dollar.
“Perception now is that the controversial multi-billionaire TV presenter and property mogul could be good for business; and talk of tax cuts and heavy spending on infrastructure would certainly be good for growth,†said Lee Wild, head of equity strategy at stockbroker Interactive Investor. Around 1030 GMT, London’s benchmark FTSE 100 index was up 0.9 percent compared with the close on Wednesday. Frankfurt’s DAX 30 also grew 0.9 percent and the Paris CAC 40 won 1.1 percent.
World stock markets have recovered from a sharp initial downturn to Trump’s win, with Europe’s leading indices closing up between 1.0 and 1.6 percent on Wednesday. Tokyo’s benchmark index closed up a huge 6.7 percent Thursday, with a plunging yen providing support. Hong Kong gained 1.9 percent and Shanghai closed 1.4 percent higher. Sydney rallied 3.3 percent higher and Seoul jumped 2.0 percent. In Paris, Vivendi shares rose more than ten percent after the French media conglomerate returned to profit in the third quarter.
But Renault shares reversed more than two percent after a government inquiry into emissions cheating entered a new stage. The French economy ministry said late Wednesday that the country’s anti-fraud unit DGCCRF had submitted its report on diesel emissions by Renault cars to prosecutors, a move that could open the door to criminal proceedings against the car maker. Asian and European trading screens were initially awash with red Wednesday as the regions’ investors were the first to react to news that the firebrand tycoon had defeated market favourite Hillary Clinton. However, a reassuring victory speech — followed by calls from Clinton and President Barack Obama to get behind Trump — provided some encouragement to traders. Wall Street stocks surged Wednesday with pharmaceutical and banking shares especially strong in anticipation of favourable Trump policies.
Most markets in Asia either entirely reversed or clawed back most of the previous day’s losses. Elsewhere Thursday, oil prices diverged as the International Energy Agency said output by OPEC oil producers had reached record levels, raising fears a global crude glut would continue to weigh on markets unless the cartel agrees on a cut.