EUROPEAN stock markets rose in early trading on Tuesday as investors bet on a clear win for Joe Biden as the United States votes in its most polarised presidential election in living memory.
Steady earnings from French bank BNP Paribas lifted its shares by 6.5%, adding to a sense that the banking sector was holding up relatively well to an economic pounding from the COVID-19 crisis.
But a 40% fall in full-year earnings at Associated British Foods due to a profit plunge in its Primark clothing business was a reminder of how the pandemic is wreaking havoc with corporate balance sheets. ABF shares fell 1.7%.
US President Donald Trump and Democratic rival Biden made a last-ditch push for votes in battleground states on Monday as their campaigns prepared for post-election legal disputes that could delay a clear outcome.
“Markets are pricing for a Biden win, certainly a clear outcome, and they want a clear and uncontested outcome,” said Michael Hewson, chief market analyst at CMC Markets.
A shock Trump win, a contested result, or just a divided outcome could all trigger corrections in markets, he said.
“Control of the Senate is crucial for any ‘blue wave’ scenario to materialise, otherwise divided government continues and fiscal stimulus expectations will need to be scaled back,” added Alvin Tan, Asia forex strategist at RBC Capital Markets.
The pan-European STOXX 600 index rose 1.3% on a second day of robust gains, having slumped to a five-month low last week.
Growth-sensitive cyclical sectors such as oil and gas, miners and banks once again led therally – all rising more than 2%.
No major European economic data is due on Tuesday, with only a smattering of earnings to steer investors. BNP bank was buoyed by a surge in currency and commodity trading to beat third quarter profit expectations.
Elsewhere, South Korea’s main index advanced 1.7% and Hong Kong’s index sprinted 2.2% higher.
The MSCI China index hit a 23-year high after Chinese factory activity expanded the fastest in a decade.
Japanese markets were closed for a holiday.
Australia’s ASX 200 ended 2% higher as the central bank trimmed interest rates to near zero and expanded its bond-buying programme, as expected. – Nov 3, 2020