Markets Overview: (Source: Bloomberg, FT, Reuters, DJ Newswires)

UK 100 Index called to open +35pts at 6945 (ex-divs -18.3pts), with yesterday’s rebound being built on overnight to allow for a retest of 6950 thanks to 6900 turning supportive. As it stands, the index is challenging Oct falling highs resistance, a proper break above which could open the door for a return to 7000, even all-time highs circa 7100. Bulls will be looking for a break above 6950, Bears on alert for suggestions that rising support at 6940 and overnight lows of 6900 will struggle to hold. Watch levels: Bullish 6960, Bearish 6890.

A positive European open comes after US markets closed with election day gains and Asian bourses recovered from their plunges of yesterday. This is based on reassessment of views about Trump and belief that a more Presidential individual is already replacing the highly devise candidate character he merely portrayed in order to appeal to American frustration and win the populist vote.

Markets are demonstrating an impressive ability to digest significant political change and move on, even quicker than we saw in the immediate aftermath of the UK’s Brexit vote. In our view this bodes well, given the increased chance that we see more of such political change, notably in Europe over the coming 12 months with elections (Austria, France, Germany) and a referendum (Italy).

While the equity market rebounds are indeed impressive, so too are breakouts by metal prices (are the speculators back?) which are in spite of the USD strengthening. The latter is based on reappraised expectations that Trump infrastructure spending plans will in fact fuel inflationary pressures that require continued monetary policy normalisation and rate hikes.

This counters prior concerns the Fed would hold off on rate hikes next month based on uncertainty about Trump’s plans. Could his plans be the start of something even more significant worldwide? Several major central banks heads having already started suggesting that governments need to start helping central banks more (fiscal/infrastructure) with efforts to revive growth.  

Japan’s Nikkei is +6% higher thanks to a weaker Yen (stronger USD, less safehaven seeking) boosting exporters and the oil price rebound helping Energy. Australia’s ASX is 3% to the good thanks to commodities rebounding (base metals and Oil) to help Energy and Miners.

US equity markets had an extraordinary day of trading, eventually paring losses to close sharply higher. After initial market shock that saw the Dow Jones and S&P down over 900 and 110 points respectively, investors latched onto the positives that a Trump Presidency would bring. Ultimately, Financials and Pharmaceuticals led the way for both indices to close sharply higher as markets welcomed his election campaign promises of deregulation in both sectors; the repeal of Dodd-Frank for the former and the relief of Clinton and her drug cap policy being defeated for the latter. Note that Dow Jones futures overnight posted fresh all time highs as the post-election rally continues.

Crude Oil prices have stage a rally overnight despite official DoE inventory data showing a larger than expected build yesterday afternoon. Prices are being driven by the perception that President elect Trump will centre his energy policies on the increased use and production of fossil fuels, abandoning his predecessor’s drive to expand the renewable energy sector (having controversially threatened to ‘rip up’ the Paris Climate Change Agreement). It is worth noting, however, so far Trump’s policies are heavy on headlines and light on details, so it remains to be seen whether he will follow through with his election campaign promises.

Gold is back below $1290/oz having traded as high as $1337 during yesterday’s tumultuous election day trading. A rally that started at 6pm yesterday continues into this morning  as uncertainty still looms after the announcement of the new US President, despite the emerging view that a Trump government may result in a faster pace of Fed rate hikes going into 2017. Only time will tell whether some of his more outlandish claims will be met or whether his altogether more presidential tone during his victory speech will be continued during his tenure.

In focus today will be the continued fallout from Trump’s Election win and what it means for markets, finances and politics the world over This is sure to provide more than enough talking points to make up for what is a distinct lack of top-tier macro data.

We have plenty of speakers to fill the void though with the Fed’s Bullard adding to comments from his colleague Williams overnight. And Fed thinking remains extremely important, the USD Basket actually strengthening since the election result, the Fed perhaps not being scared off from further rate hikes as soon as next month.  

Closer to home we have EU President Juncker up early this morning followed by the ECB’s Costa and Constancio, mid-morning and mid-afternoon, respectively. The day closes with the Bank of England’s (BoE) Chief Economist Haldane talking after the European close.

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UK Company Headlines: (Source: Reuters/DJ Newswires)

• AstraZeneca offsets flagging Crestor with cost cuts, disposals
• Anglo American Platinum sees FY EPS and HEPS at least 20% higher
• Beazley's gross written premiums buoyed by specialty lines
• Beazley applies for EU licences for Irish reinsurance business
• Hikma Pharmaceuticals sees FY group revenue to grow by about 35%
• ITV says advertisers becoming increasingly cautious
• Oil firm DNO's Q3 beats forecast, to make lower offer for Gulf Keystone
• Builder Bovis says prices, sales continue to rise after Brexit vote
• Vedanta Resources says H1 EBITDA -4% on lower commodity prices
• British bank Aldermore defies Brexit concerns with higher lending, says 9 – month mortgage lending +24%
• Mediclinic International six – month underlying EPS falls
• Dairy Crest says H1 revenue -7%
• SuperGroup sees H1 profit of £20–22m
• National Grid says H1 operating profit +1% to £1.9bn
• Halfords says FY profit to be in line with expectations despite currency hit
• Russia's Rosneft says Q3 oil output +1.3% y/y to 4.15m bpd
• 3i posts interim dividend of 8 pence per share for six months ending Sept
• Aegon Reports Net Income of EUR 358m in Q3 2016
• Oil edges higher as markets recover from Trump's shock victory