Market report: FTSE 100 recovers in early trade, Bitcoin reaches fresh highs
Susannah Streeter, head of money and markets, Hargreaves Lansdown: “London’s blue-chip index, the FTSE 100, has begun the week on the front foot, rising in early trade, as concerns over the impact of Trump’s trade policies on multinational companies recedes a little. Focus has turned to China’s latest stimulus plan and expectations of higher military spending amid ongoing conflicts. Fresh debt relief from Chinese authorities appears to have added to positive sentiment. A $1.39 trillion package was unveiled at the National People’s Congress to help local government borrowing issues, and there is clearly hope it will help move the dial and stabilise the economy. Mining stocks are among the gainers in early trade, while drinks giant Diageo in the FTSE 100 and Burberry in the FTSE 250 have also headed higher as investors assess that consumers in China might have a little more appetite to spend in the months to come. There was some disappointment about the lack of firepower deployed in terms of tax cuts. Fresh data showing that the risks of deflation are still stalking the economy are also a concern, with non-food prices still falling. However, authorities may be keeping their powder dry and waiting to see what impact the new Trump Presidency will have, before hitting the economy with fresh stimulus. Aerospace and defence stocks have also helped lift the index higher amid expectations Trump’s win could usher in an era of higher military spending. Russia and Ukraine have intensified attacks using mass drone deployments. Whatever the outcome of the war, it looks likely that financial commitments to NATO’s budgets may have to be increased, which would potentially filter through to more military contracts.
Wall Street has been deep in optimism, amid expected tax cuts and lighter regulation from a Trump presidency, helped by the Fed’s interest rate cut. S&P 500 futures point to positive sentiment continuing, off the back of a 5% gain last week. The euphoria unleashed by Trump’s win has pushed Bitcoin to fresh record highs. His pledge to go all in on crypto has sent Bitcoin to fresh heady heights, hitting another high of $81,899 before retreating a little. He’s made an about turn on supporting the industry and is now vowing to turn the US into the crypto capital of the world. Bitcoin speculators are betting on a more clement regulatory environment, and have expectations that the authorities may build up a reserve crypto fund, helping lift ongoing demand.
The extent to which Trump will rein back on Biden’s measures to stimulate green technologies will be hotly debated at COP29, with fears swirling that the administration could go as far as pulling the US out of the Paris climate agreement again. There is a growing expectation that Trump’s second term will see the US official commitment to decarbonisation going into reverse, but given the transition to cleaner energy has come so far, US states and multinationals still committed to climate action, are likely to stay on track. However, signalling is still hugely important, particularly when it comes to consumer behaviour, and it’s going to be a lot harder to nudge people into being more environmentally conscious.
Travellers’ enthusiasm for taking to the skies continues unabated, with Heathrow notching up its busiest October ever. The West London global hub is expected to handle record numbers of passengers this year, with around 83.8 million set to travel through the airport. Last month alone, more than 7.2 million people used its four terminals. It’s a demonstration of how post-pandemic demand for travel shows little sign of waning, even though budget conscious consumers have shown evidence they are unwilling to swallow significant hikes in fares. However, given this sustained demand, it looks unlikely that the government’s increase in Air Passenger Duty is going to have a hugely detrimental effect on demand on hubs like Heathrow.
While oil traders play a waiting game when it comes to Trump’s policies towards the Middle East and Ukraine, geo-political tensions are still high. However, supply concerns are being offset by worries about weaker demand for energy in China’s economy, given the latest stimulus package didn’t go as far as expected in offering tax incentives to businesses and consumers. This disappointment has weighed on oil prices, with Brent Crude trading flat at $73.9 a barrel.’’
