Europe midday: Investors eye election as US futures rise
European stocks held on to morning gains overnight, brushing aside concerns about new Covid-19 lockdowns and turning their attention to the US elections.
The pan-European Stoxx 600 index was up 1.5% with all major bourses in the green. Early polling gave Democrat challenger Joe Biden a slight lead over incumbent Donald Trump, although investors were still wary the US President would disrupt proceedings and delay the result.
Dow Jones futures were up more than 400 points after a 423-point gain for the index on Monday. Investors were also spurred by Australia's central bank to slash interest rates to historic levels and pump AUD $100bn of quantitative easing into the economy.
IG analyst Chris Beauchamp said the Australia move was "just the kind of central bank action that investors like to see, with the hope that more might be forthcoming later in the week from the Bank of England giving a further boost to bullish sentiment".
"The risk is that investors are getting ahead of themselves, given the potential for a long, drawn-out battle over the result of the US election in coming weeks should no obvious result appear by this time tomorrow morning."
"In that case risk assets could well struggle to make much headway, even if they do manage to avoid further substantial losses similar to what we saw last week. The focus on the election obscures the really important element, namely a US fiscal stimulus, since whoever emerges as the winner will need to sort out this most pressing item, before the US economy moves into an even deeper slump."
In equity news house builders were among the gainers after Crest Nicholson said full-year profit was set to be ahead of market expectations thanks to positive trading since the end of the Spring lockdown, as it announced the reinstatement of its dividend.
Crest said 2020 adjusted pre-tax profit will be "significantly" ahead of consensus of £37.9m and at the upper end of its previously-guided range of between £35m and £45m. The company hailed a good sales performance through the second half, with current sales rates remaining robust and slightly ahead of pre-lockdown levels.
Barratt Developments and Taylor Wimpey were also up on the news.
Bayer shares were lower after the company revealed it had set aside another $750m to cover cancer claims against its Roundup weedkiller, bringing the total up to $2bn, as it posted a third-quarter net loss of €2.74bn.
Associated British Foods shares fell after the company reported a 40% fall in earnings as the Covid-19 lockdown hammered sales at its Primark retail chain.
Full year revenue came in at £13.9bn a decline of 12%, and slightly below expectations, while adjusted operating profits fell back to just over £1bn, a fall of 31%. Broken down into their respective segments the retail division accounted for the biggest hit, as profits fell to £362m from £969m.
Grocery and sugar saw big increases in profits, with grocery seeing an increase to £437m from £381m, while the sugar business saw profits rise to £100m from £30mOn another optimistic note for next year, management said they expect Primark full year sales and profits to be higher for next year, though this will be contingent on there being no further lockdowns.
Shares in Banque Paribas rose as the French bank reported third quarter net income of €1.89bn, driven by outperformance in its investment banking division, which saw trading revenue rise 36% to €1.25bn. The bank also set aside €1.24bn in respect of non-performing loans.