FTSE posts best week since June as Biden nears victory

More than $4 trillion has been ploughed into global stock markets since Monday, with Europe's Stoxx 600 jumping 7pc this week

The FTSE 100 notched up its best weekly performance since June as Joe Biden's victory in the US presidential election looked all but assured.

London’s blue-chip index rose for a fifth day despite a modest 3 point rise to end at 5,910 on Friday, meaning total gains of 333 points, or more than 6pc, this week.

Stock markets rose as Americans went to the polls on Tuesday, and shot up on Wednesday and Thursday as it became clear that the late counting of absentee and mail-in ballots meant a big swing to the Democrat candidate across key battleground states.

The rally was more muted on Friday, with the final presidential outcome still unknown, but Wall Street still boasted its best week since April. The S&P 500 rose some 7.3pc through the week.

European equities reversed early losses, with the pan-continental Stoxx 600 recording a weekly rise of 7pc – its best since June. Wall Street made up ground to be flat in afternoon trading after opening lower.

Asian markets were mixed overnight, with Chinese stocks falling as Japan’s Nikkei index rose to a 29-year high.

More than $4 trillion has been ploughed into global stock markets since Monday according to Bloomberg data, putting equities on course for their third-best week of 2020.

The dollar – seen as a safe haven during market uncertainty – weakened substantially as a risk-off mood took hold, dropping to its weakest level since May 2018. 

The likely outcome of a Democrat-led White House constrained by a Republican Senate has boosted market confidence, with analysts predicting that such a power split would prevent Mr Biden from launching a legislative crackdown on tech giants that have underpinned a near-relentless Wall Street rally.

John Hardy, a strategist at Saxo Bank, said markets appeared “surprisingly happy” with the prospect of political deadlock. 

“A gridlocked Washington means no risk to the major equity indices and mega-cap stocks from a monopoly-busting, tax-raising ‘Blue Wave’,” he told clients.

Although a long-sought-after stimulus package to tackle the impacts of Covid-19 may remain elusive, investors also appear confident that monetary support from the US Federal Reserve will continue to underpin equities.

Gains cooled slightly on the last trading day of the week, but the FTSE shook off narrow losses to extend gains further as Mr Biden took the lead in Georgia and Pennsylvania – shutting off Donald Trump’s path to victory.

The former vice-president is expected to extend his lead in both states as the final ballots are counted, and also holds leads in Nevada and Arizona. Although the president has been chipping away at Mr Biden’s lead in the latter state, victory looked all but certain for the Democrat.

A surprisingly strong jobs report added to the upbeat mood. Data showed the US added 638,000 jobs in October, 100,000 more than expected. The unemployment rate dropped from 7.9pc to 6.9pc but one that masks the long-term damage the pandemic has caused.

“With policy gridlock likely in the wake of the US election, our focus has shifted back to economic fundamentals,” said Gregory Daco from consultancy Oxford Economics.

"Real-time data is quite sobering in that regard, with demand being restrained by rising Covid-19 infections and slower employment gains proving insufficient to offset lapsing fiscal aid.”