Europe midday: Stocks off lows after Trump speech; pharma issues gain

European stocks were down but paring losses by midday as investors were somewhat reassured by the conciliatory tone Donald Trump struck in his acceptance speech, while gold rallied and the dollar slumped against the yen.

The benchmark Stoxx Europe 600 index was down 1%, Germany’s DAX was 1.5% lower and France’s CAC 40 was off 1.6%.

Although investors are generally uneasy about the lack of any specific details underlying some of Trump’s proposals, it seemed his acceptance speech may have calmed some market participants.

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.”

Spreadex’s Connor Campbell said: “A surprisingly ‘presidential’ Trump victory speech – setting the bar incredibly low for what is expected from a recently elected candidate – seems to have reassured investors, the talk of infrastructure spending and a lack of usual vulgarity allowing for a relative aura of calm to encroach on the market.

“Of course, just as Britain hasn’t yet Brexited, America hasn’t officially entered the era of Trump, suggesting that much of the trading that greeted the open was a gut-reaction rather than informed positioning, especially considering how thin on the ground the Republican’s actual policies are. That does, however, leave plenty of room for volatility as 2016 begins to wrap up, let alone the months and (shudder) years of an actual Trump presidency.”

Healthcare shares bucked the trend and helped to limit overall losses, with the Stoxx 600 sub-index for the sector up 2.9%. 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.

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 benefitting 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.

In currency markets, the pound was up 0.6% versus the dollar at 1.2448, while the euro was 0.8% higher at 1.1103. Meanwhile, the greenback was down a whopping 2% against the yen to 103.08, but off earlier lows. The Mexican peso was also off its worst levels after plunging to an all-time low against the dollar earlier.

Gold futures were up 2.4% to $1,304.50 an ounce, enjoying their strongest rally since Brexit as investors opted for safe havens.

Oil prices were little changed, with West Texas Intermediate down 0.3% to $44.84 a barrel and Brent crude flat at $46.04

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 edged down after it suspended a top executive, while another stepped down amid a payments probe.

Alstom bucked the trend, up more than 4% after the French engineering group posted a rise in first-half sales and operating margins.