A speech by US president Donald Trump shortly before European markets were due to open sent investors running for cover at the prospect of a drawn-out election result and the threat of legal action to prevent the counting of postal votes in key states such as Michigan, Pennsylvania and Wisconsin.
European index futures including the FTSE, the French CAC and the German DAX swung from modest gains to losses of 2% or more while the dollar climbed as the consensus ‘short’ trade rapidly unwound.
Source: Bloomberg
Despite last-minute gains for Democratic challenger Joe Biden in Arizona and Maine, markets were roiled by Trump’s claim of voter fraud.
Also the prospect of a Republican-controlled Senate creating an impasse in the event of a Biden presidency disappointed markets.
At the open the FTSE 100 dropped nearly 70 points or 1.2% to 5,718 with banks and mining stocks taking the brunt of the selling.
The falls were mitigated by gains in classic defensive stocks such as AstraZeneca (AZN), GlaxoSmithKline (GSK), British American Tobacco (BATS) and Imperial Brands (IMB).
Within half an hour of the open, the FTSE had recovered substantially although banks remained the weakest sector not just in the UK but across Europe, unwinding the rally of the last three days.
FOR A LIST OF FTSE MOVERS SEE HERE
