Europe close: Stocks stage surprise gains after Trump win

European stocks finished higher in a volatile day of trading in global capital markets, with some investors' concerns apparently assuaged by the conciliatory tone Donald Trump struck in his acceptance speech and amid hopes that the US Congress will be able limit any potentially damaging economic policy initiatives.

Thus, traditional 'safe havens' such as gold edged just slightly higher and the Japanese yen ended the day largely unperturbed, although Trump's words came too late to save equity benchmarks in Japan and South Korea or the likes of the Mexican peso. Indeed, the drop in the value of the latter carried all the way through to the European close as markets hedged their bets regarding the risk of heightened protectionism.

Against that backdrop, the benchmark Stoxx Europe 600 ended the day higher by 1.46%, Germany’s DAX gained 1.56% and France’s CAC 40 advanced 1.49%.

Trump said in his speech: “We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals. We’re gonna rebuild our infrastructure which will become, by the way, second to none and we will put millions of our people to work as we rebuild it.”

Commenting on the day's events, Mickey Levy at Berenberg told clients: "Looking forward, much of Trump’s erratic and offensive campaign rhetoric will be tamed. Some of his outlandish ideas have zero chance of being implemented. Congress will force Trump to greatly modify and rationalize his tax and spending policy promises and will prevent enactment of any legislation that significantly increases budget deficits.

"Following the markets’ initial negative response, global portfolio managers will refocus on the fundamentals, come to recognize that new policies will not unhinge the economy--and may help it--and recognize investment opportunities. Valuations will rebound."

Healthcare shares bucked the trend and helped to limit overall losses, with the Stoxx 600 sub-index for the sector up 4.61% at the close. A win for Clinton had been considered bad for the sector as she had made it clear she wanted to increase regulation and combat high drug prices.

Basic resource shares did best, gaining 6.60%.

In London, CRH and Ashtead surged on the back of Trump’s comments about infrastructure spending. In a European equity strategy note on Wednesday, Deutsche Bank highlighted both companies as potentially benefiting from higher infrastructure spending in the US. It noted that 84% of Ashtead’s revenues are generated in the US, while CRH generates 53% of sales from across the pond.

Wolseley was also in the black, with Deutsche Bank pointing out that it is a major US distributor for heating, ventilation and waterwork products, with 63% of its sales generated there. Strategists at Credit Suisse were of a similar view, highlighting it in a report as one of their preferred infrastructure 'plays'.

In currency markets, the pound was up 0.33% versus the dollar at 1.2409, while the euro was 0.73% lower at 1.0935. The Mexican peso was also off its worst levels after plunging to an all-time low against the dollar earlier, but the greenback nevertheless finished the session up by 7.81% to 19.75 pesos.

Gold futures were up by just 0.02% to $1,275.00 an ounce.

Oil prices moved highwer, with West Texas Intermediate up 1.62%% to $45.72 a barrel and Brent crude rising to $46.71.

In corporate news, Sainsbury's was sharply lower after it cut its interim dividend 10% as underlying profits fell the same amount despite revenues increasing as the decline in like-for-like sales eased off in recent months.

Burberry was also under the cosh after it said half-year revenues and profit decreased as the luxury fashion house implemented a turnaround plan to cut costs and revamp its products.

Munich Re was in the red after raising its full-year profit guidance and reporting an increase in third-quarter profit.

Rio Tinto reversed earlier losses after it suspended a top executive, while another stepped down amid a payments probe.

Alstom bucked the trend, up more than 9% after the French engineering group posted a rise in first-half sales and operating margins.