US pre-open: Stocks set for further gains as investors mull Trump win

US stocks looked set for more gains at the open on Thursday as investors continued to mull over the implications of Donald Trump’s presidential victory.

At 1100 GMT, Dow Jones Industrial Average and S&P 500 futures were up 0.8%, while Nasdaq futures were 1% higher.

On Wednesday, the Dow Jones ended just 47 points short of a record close as investors came around to thinking that Trump’s policies of increased infrastructure spending would be good for equities.

Joshua Mahony, market analyst at IG, said: “Stocks have continued their ascent this morning, as the initial market freak-out proved ill-founded, with the risk-off sentiment soon flourishing into an all-out risk rally. The incredible nature of yesterday’s turnaround was perfectly encompassed by the fact that the S&P 500 managed to finish in the green, despite being limit down (-5%) earlier in the session. The source of this bounce seems to be grounded in the differential between Trump’s economic and social policies. While Trump’s controversial rhetoric with regards to immigrants and Muslims stole the headlines, he is predictably very pro-business, promising lower income and corporation taxes.

“All eyes now turn to the Fed, which remains likely to raise rates despite initial fears that we could see them hold off amid widespread selling. Trump has previously criticised the Fed for their inaction and thus low rates may not be around for much longer. However, in Trump we seem to have found the next bout of stimulus for markets to cling on to, with over half a trillion dollars of infrastructure spending expected to be heading their way.”

Meanwhile, oil prices were mixed, with West Texas Intermediate flat at $45.26 a barrel and Brent crude 0.8% firmer at $46.72.

In currency markets, the dollar was up 1% against the yen at 106.65 and 0.1% higher against the euro at 0.9172, recovering from the previous session’s losses.

Pharmaceutical stocks were firmer in pre-market trade on Thursday, with the likes of Pfizer and Merck both firmly in the black as investors breathed a sigh of relief that Hillary Clinton did not win the presidential race, as she had made it clear she planned to impose stricter pricing regulations on the sector.

Macy’s and Ralph Lauren were among the companies slated to report earnings before the opening bell, with numbers due from Walt Disney and Michael Kors after the close.

Despite the upbeat tone in financial markets, some analysts were sceptical.

Societe Generale pointed out that policy uncertainty still looms on the horizon and said it was awaiting Trump's nomination of key cabinet officials and legislative priorities to have a clearer understanding of the full economic impact of his victory.

“Assuming Trump is able to engineer a fiscal stimulus, the short-term impact should prove positive. In the longer term however, hawkish trade policies and higher US debt would drag down both US and global trend potential,” it said.

Still to come on the macroeconomic calendar, US initial jobless claims are at 1330 GMT. Investors will also eye a speech by St Louis Federal Reserve President James Bullard on the economic outlook at 1315 GMT.