FTSE soars as markets buoyed by potential US Democratic sweep

Kumutha Ramanathan
·3-min read
The outside of the London Stock Exchange building is seen in the City of London, March 7, 2005. The London Stock Exchange board has met to review its options after Deutsche Boerse scrapped a 1.3 billion pound ($2.5 billion) plan to buy it, leaving Euronext as the only party with a declared interest in winning control of Europe's largest equity market. MRKET REUTERS/Toby Melville  TM/ASA
Banking stocks are among the leaders on London’s (^FTSE) as global markets are eyeing a Democratic sweep in the closely-watched Georgia Senate race. Photo: REUTERS/Toby Melville TM/ASA

London’s FTSE 100 (^FTSE) surged on Wednesday, as global markets eyed a potential Democratic sweep in the closely-watched Georgia Senate race.

The blue-chip index closed 3.7% higher in London, outperforming other indexes on the continent.

“It’s been a really impressive day and really underlines the pent-up demand for UK equities,” said Neil Wilson, chief market analyst at Markets.com.

Wednesday’s rally was the best daily performance since 9 November in 2020, Wilson said, when the Pfizer (PFE.DE)/BioNTech (22UA.F) vaccine efficacy was announced.

The buoyant mood was helped by signs of a Democratic sweep in Georgia’s Senate elections. US television networks and the Associated Press news agency called the first of two runoff Senate races in Georgia, USA, for Democratic candidate Raphael Warnock. The result would unseat Republican Kelly Loeffler. Democratic challenger Jon Ossoff also holds a slim lead over Republican David Perdue in the other race, according to Reuters, with 98% of votes counted.

Watch: European markets brace for new lockdown measures

UK banks benefitted from expectations of more expansionary US fiscal policy and higher taxes should the wins be secured and after president-elect Joe Biden enters office.

Standard Chartered (STAN.L) gained 9.5% at market close on Wednesday in London. Barclays (BARC.L) was also up 8.3% and HSBC Holdings (HSBA.L) rose 9.9%.

“The only plausible explanation is changing interest rate assumptions due to what’s happening in the US,” Sam Woods, deputy governor of the Bank of England, said of rising bank shares during an appearance in front of the Treasury Select Committee on Wednesday afternoon.

In Europe, Germany’s DAX (^GDAXI) gained 1.9%, while the CAC 40 (^FCHI) was rose 1.3% in Paris.

US markets were in positive territory at the end of the trading day in London. The S&P 500 (^GSPC) was up 1%. Dow Jones (^DJI) gained 1.5% and the Nasdaq (^IXIC) headed higher 0.2%.

Watch: Crowds Rally in Atlanta to Support Senate Candidates Ossoff and Warnock

EU regulators approved the Moderna (MRNA) COVID-19 vaccine on Wednesday, paving the way for a mass vaccination programme across the bloc. The approval contributed to market confidence, Wilson said.

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Oil prices rose dramatically. Brent (BZ=F) hit a peak last seen 11-months ago, after Saudi Arabia surprised the market by agreeing to make bigger output cuts than expected.

Asian markets were mixed overnight as the final US Senate votes were being counted. While Japan’s Nikkei (^N225) fell 0.4% at market close, the Hong Kong Hang Seng (^HSI) rose 0.2% and the Shanghai Composite (000001.SS) gained 0.6%. South Korea’s KOSPI (^KS11) fell 0.8%.

Watch: UK on course for a double-dip recession in the first quarter