Europe: Stocks jump at close with eyes on tight US election race

[BENGALURU] European stocks closed with strong gains on Wednesday as investors unwound bets of a Democratic sweep in the US presidential election as the race proved far closer than polls had predicted.

The healthcare sector, typically considered more stable during times of economic uncertainty, rallied 4.9 per cent, while technology stocks that have powered a rebound in global equities since the pandemic lows, surged 3.0 per cent.

Global markets were whipsawed earlier as US Republican President Donald Trump took the lead over Democratic rival Joe Biden in a number of vital swing states, while opinion polls had given Biden a strong lead nationwide for months.

Adding to concerns, Mr Trump falsely claimed he had won the election with millions of votes still uncounted, and said he would go the US Supreme Court to fight for the win if needed.

After falling as much as 1.3 per cent at one point, the pan-European Stoxx 600 index swung 2.1 per cent higher, while the German DAX gained 2 per cent and UK's FTSE rose 1.7 per cent.

European markets gained earlier this week on anticipation a Biden win would bring better trade ties with Washington and a bigger fiscal package for the coronavirus-hit US economy.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Economically sensitive banking, oil & gas and mining stocks fell into the red after leading a surge this week on hopes of more stimulus.

Wind turbine makers Vestas and Siemens Gamesa, which were expected to benefit from Biden's clean energy plan, fell 3.5 per cent and 1.6 per cent respectively.

"Markets are to some extent reversing the pricing in of the'blue wave'. We have better support for likes of healthcare and technology," said Jonathan Stubbs, equity strategist at Berenberg.

On Wall Street, the technology-heavy Nasdaq index surged 4.1 per cent as investors said chances faded for Democrats to score a big win in the US Senate, lowering bets of higher antitrust scrutiny and capital gains taxes.

"We would interpret the outperformance of the Nasdaq as possibly a divided government, less fiscal stimulus, and more stay-at-home environment as Covid-19 cases rise," said Matthias Scheiber, global head of multi asset portfolio management at Wells Fargo Asset Management.

European equities, which lean on "value" sectors such as banks and energy, trade at a record low relative to US stocks which count big on "growth" sectors like technology.

Among individual movers, German online fashion retailer Zalando jumped 4 per cent after it confirmed the increased guidance it gave last month.

Britain's Marks & Spencer surged almost 5 per cent after encouraging performance in its food business but reported the first loss in its 94 years as a publicly listed company.

REUTERS