Stock markets celebrate with rises the defeat of Trump while energy becomes cheaper

BarcelonaFinancial markets reacted this Wednesday with optimism to the defeat of the Republican Party in the United States legislative elections. Most stock exchanges around the world closed the day with gains, while the price of oil recorded significant drops, although it remains at levels close to 100 dollars per barrel in the case of Brent, the benchmark crude in Europe.

US stock markets opened the day with the news that the Democratic Party will obtain a majority of seats in both chambers of the US Congress: the Senate and the House of Representatives. Thus, on Wall Street, the two benchmark indices, the Dow Jones and the S&P 500, began Wednesday's session with increases of 3.03% and 1.58%, respectively, while the Nasdaq, the index that groups technology sector companies, also began the day with gains, in this case of 1.44%.

In Europe, the situation was similar. Of note is the Ibex-35, the benchmark index for the Spanish stock exchange, which closed its best day since the month of April, with a 3% increase that propelled it to levels above 19,300 points. The banking sector, one of the most heavily weighted sectors in the index, was the most benefited, with Santander, CaixaBank, and BBVA seeing increases of over 4%. In statements collected by Efe, analyst Javier Cabrera stated that a Congress controlled by the Democrats can "confront" the President of the United States, Donald Trump, and pressure him "to put an end to the war in the Middle East" and its impact on interest rates.

In the rest of the continent, green numbers dominated the boards in all markets. Thus, the Frankfurt DAX closed Wednesday with an increase of 3.31%, while in Paris the CAC-40 rose 1.96% and in Milan the FTSE MIB gained 2.18%. Outside the European Union, in London –the largest European stock exchange– the day closed with a 1.79% increase in the case of the FTSE 100, the benchmark index of the British market.

Declines in energy markets

The rising cost of fuel, electricity, and gas is the foundation of the strong inflation affecting a large part of Europe, but which has impacted the USA very directly. The increase in the cost of living has been one of the elements that have most benefited the Democrats in these elections, in which voters have blamed Trump for the price hikes derived from the energy and geopolitical crisis following the war in Iran.

With the Democratic victory, energy markets have reacted with declines. Brent crude has been positioned for much of the day below 95 US dollars per barrel, which represents a reduction of almost 9%. In contrast, the price of a barrel of West Texas crude, the benchmark for the American continent, has cheapened by less than 1% and has remained above 95 dollars.

Regarding natural gas, the Dutch TTF market, where prices for Europe are negotiated, has recorded a cost drop of over 8%, with a price lower than 85 euros per megawatt (MW).