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Trump victory speech helped settle UK investor nerves

Published 09/11/2016

President-elect Donald Trump during an election night rally in New York (AP)
President-elect Donald Trump during an election night rally in New York (AP)

Market experts said Donald Trump's victory speech helped soothe rattled UK investor nerves but warned uncertainty would keep global stocks under pressure.

London's FTSE 100 Index appeared to be avoiding a "second Brexit" reaction as blue chips rowed back from initial sharp losses of more than 2%, with an air of calm falling over UK trading desks.

Kathleen Brooks, research director at City Index, said: "The first speech by President-elect Trump has had a calming effect on the markets.

" We have suffered a massive political shock but the markets are wondering if President Trump is less of a threat to America's economy in office, compared to what he was during the campaign."

AJ Bell also said the "conciliatory tone" in Mr Trump's speech helped cushion the blow on the FTSE 100, although investors still rushed to so-called safe haven stocks and assets, with precious metal miners Fresnillo and Randgold Resources among the biggest blue chip gainers .

Russ Mould, investment director at AJ Bell, said: "A drop in stocks and gains in haven assets like the yen and gold are textbook knee-jerk reactions to unexpected events, but once they sit down and think more clearly markets will need to consider long-term issues such as protectionism and inflation."

He added losses on markets will be limited amid hopes Mr Trump's election victory will see the US Federal Reserve hold off from raising interest rates next month.

There are fears on global financial markets over Mr Trump's more extreme policies.

"If Trump really does try to pursue some of the more extreme policies outlined during his campaign, he still has to get them through both the House of Representatives and the Senate," said Mr Mould.

In a gloomy reaction to Mr Trump's election win, Spreade x financial analyst Connor Campbell said 2016 "now officially seems to be the year of hate and uncertainty", with the global economy " plunged into darkness where little is known about its future".

"One thing does seem to be for certain; there is no way (US Federal Reserve chairman) Yellen and co will hike rates in December," he said.

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