European share markets rallied on Thursday after Asian stocks rebounded from Wednesday’s sharp sell-off in the immediate aftermath of Donald Trump’s US election victory.
Hopes that Mr Trump will introduce a pro-business agenda to stimulate US economic growth helped to blunt concerns about his surprise win.
In London, Paris and Frankfurt, the main stock markets opened 1% up.
That followed big jumps in Asia, where Japan’s Nikkei 225 soared 6.7%.
CMC Markets strategist Michael McCarthy said it appeared a consensus was building that much of Mr Trump’s rhetoric during the campaign “was a sales pitch rather than a commitment to act”.
He said that the reaction on the markets indicated that investors had “ignored the potential for damage to international trade and growth prospects and focused on Republican control of both houses of Congress as well as the White House. This offers the prospect of reform that could stimulate the US economy.”
In London, the FTSE 100 index, which closed 1% up on Wednesday, advanced a further 1% in the first hour of trading on Thursday. Germany’s Dax and France’s Cac indexes were both 1.2% ahead.
In Asia, following gains on Wall Street, the Nikkei’s 6.7% rise saw it more than recover losses from the previous session. Hong Kong’s Hang Seng added 1.9%.
On the currency markets, sterling rose 0.39% against the dollar to $1.2455, and was slightly up against the euro at €1.1368.
Traders had expected Hillary Clinton to beat Mr Trump to become the next US president. His victory initially sent money flowing into stocks that were deemed to be safer, as well as traditional haven assets such as gold and currencies including the yen.
“Investors were risk averse yesterday, then after seeing that Americans were optimistic and chasing the market higher, they wasted no time reversing their positions,” said Takuya Takahashi, a strategist at Daiwa Securities in Tokyo.
“Some of the investors must be thinking that they shouldn’t have sold after all.”
Kathleen Brooks, an analyst at City Index, suggested Mr Trump’s acceptance speech, in which he called for the country to unite, had helped to settle some of the market jitters.
And Nariman Behravesh, chief economist at IHS Markit said that “after the initial shock, investors seem to feel that a Trump administration could be good news for US businesses, with lower taxes and a reduced regulatory burden”.
He added that while Mr Trump had set out several broad economic policies, including corporate tax breaks and the renegotiating or scrapping of trade deals, there was no certainty these would go ahead.
“As in the past, it is unclear how much of the campaign bluster will translate into actual policy initiatives.”