European stock markets rallied on Wednesday, with the UK’s FTSE 100 rising by 1.5%, as traders responded to Donald Trump moving closer to securing the US presidency. This result provided a degree of clarity for the future of the United States economy, giving investors renewed confidence. Overnight, the US dollar strengthened significantly, causing the pound to fall around 1%, trading at 1.292 against the American currency.
On the other side of the Atlantic, US markets saw an uplift during Wednesday’s trading session, despite uncertainty going into the final voting day. Economists suggest that this increase in investor confidence may be driven by expectations of a lower tax environment under Trump, along with potential trade tariffs that could fortify the dollar further.
However, economists warn that the global impact of Trump’s proposed economic policies is still being evaluated. Analysts at ING Economics highlighted that while polls had pointed to a tight race, markets have shown growing confidence in this outcome, as seen in the rise of equity markets, the dollar, and Treasury yields. They added that maintaining these trends may depend on Trump’s ability to swiftly unite his party and advance his legislative agenda through Congress.
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