Wall Street slips but FTSE 100 rises as Joe Biden edges towards presidency

Wall Street stocks slipped after a week of gains as Democrat challenger Joe Biden inched closer to the presidency, but the FTSE 100 rose on a mixed day’s trading.

The S&P 500 dipped 0.2 per cent while the Dow Jones fell 0.3 per cent. The tech-dominated Nasdaq was 0.5 per cent lower.

In the UK, the FTSE 100 rose 0.5 per cent after a choppy day’s trading to stand at 5,934 points.

Germany’s Dax was down 0.2 per cent but the Europe-wide Stoxx 600 was 0.1 per cent higher.

All eyes were on the US election results, which continued to trickle in after polling day on Tuesday. Joe Biden looked set to beat President Donald Trump, although in a much closer result than polls had suggested.

Analysts suggested US investors were taking profits after a week of gains. Another explanation was that they were bracing themselves for a bitter legal fight by the Trump campaign.

Wall Street takes cash off the table

Stocks have soared this week despite the uncertain election result. The Nasdaq was on track to end the week around seven per cent higher and the FTSE 100 was up around six per cent. 

Investors said a small Biden victory would mean big stimulus is unlikely. This led to a stampede over the past few days into the big tech stocks such as Amazon and Google which are set to grow rapidly even if the economy slows.

Biden would also be less able to tighten regulations and raise taxes, investors said.

The fact that a big stimulus package is less likely saw an unwinding of the “reflation trade”. The dollar has fallen sharply over the last week and government bond yields have slipped in expectations of lower growth.

“Profit taking is kicking in after a remarkable run in financial markets,” said Craig Erlam, senior market analyst at Oanda.

“Investors have retained the faith in the process and are being rewarded,” he said. “But it seems the initial rally has run its course and cash is being taken off the table.”

FTSE 100 rises but European outlook murky

In the UK, the FTSE 100 rose along with the mid-cap FTSE 250. It opened in the green, then slipped into the red, and then rose again.

England yesterday entered a new month-long lockdown, prompting the Bank of England to launch £150bn more stimulus and chancellor Rishi Sunak to extend the main job support programme until March.

The outlook for European stocks remained uncertain, however, with surging coronavirus cases and new lockdowns.

“The continued spread of the coronavirus in Europe brings further cause for concern despite the recent gains,” said Joshua Mahony, senior market analyst at IG.

Mahony said lockdown measures are “likely to last well beyond the four-week timeframe set out in the UK”.