European shares rally as Trump claims victory

By Shashwat Chauhan

(Reuters) -European shares jumped nearly 2% on Wednesday, tracking a rise in U.S. stock futures, as Donald Trump claimed victory in the presidential election and Republicans took control of at least one chamber of Congress.

Fox News projected that he had defeated Democrat Kamala Harris, although other news outlets are yet to call the race.

The pan-European added 1.7%, on track for its biggest single-day advance so far this year.

Futures tracking the jumped more than 2%. Trump has already won the swing states of North Carolina, Georgia and Pennsylvania and holds leads in several others, according to Edison Research.

Jochen Stanzl, chief market analyst at CMC Markets (LON:), Germany, said that the jump in prompted some catch-up buying in European equities.

“We hope that not everything is going to be as bad as it could be for Europe and for Germany with regards to what Trump is going to do.”

Popular ‘Trump Trades’, stocks which could benefit or come under pressure if Trump takes the White House, were on the move on Wednesday.

“Investors have been pausing (recently) when it comes to the Trump trade, but they are fully installing it right now,” added CMC Markets’ Stanzl.

Trump is seen as bullish for European defence stocks, given his warnings to scale back U.S. military support in the region and force NATO members to spend 2% or more of their GDP on defence.

An index of Europe’s aerospace and defence companies jumped 2.7% to a record high.

Shares of European renewable energy companies came under pressure. Trump has vowed to scrap offshore wind projects through an executive order on his first day in office.

Oersted and Vestas fell 8.7% and 6.8%, respectively, while the broader utilities sector was down 0.8%.

A gauge of STOXX volatility fell to its lowest level since Sept. 27. It was last at 16.5 points.

Among other earnings-driven moves, Novo Nordisk (NYSE:) jumped 8.4% after the weight-loss and diabetes drugmaker reported better-than-expected quarterly sales of its popular Wegovy weight-loss drug and narrowed its 2024 outlook.

BMW (ETR:) slipped 3.7% after the German automaker reported a 61% drop in its quarterly third-quarter profit, missing analyst expectations.

The U.S. Federal Reserve and the Bank of England’s rate decisions are expected later in the week.

Trump’s policies on immigration, tax and tariffs are generally viewed as inflationary, which could prompt higher U.S. interest rates.