By Eamon Quinn
The worst fears of investors have been avoided as stock- markets took on the chin potential clashes between a new Democrat-controlled House of Representatives and president Donald Trump’s White House.
Analysts said there was little sign of any crisis buying of gold, a haven in times of uncertainty, and a host of shares in US drug companies, which have a significant presence in Ireland, surged on hopes for a boost to US healthcare spending.
The Ftse-100 and other European stock indices rose by around 1%.
The Iseq Overall climbed by almost 2%, driven by heavyweights CRH and Ryanair, which were up by around 3.25% and 3.75%.
“The new political landscape will herald some changes like a possible bout of investigations into president Trump including scrutiny of his tax bills and the ongoing suspicion of collusion with Russia during the last presidential election,” said Fiona Cicotta, senior market analyst at City Index.
“But with a number of financial policies the two parties are actually not that far apart and bills boosting investment in infrastructure are set to keep stockmarkets happy,” she said.
At online broker IG, chief market analyst Chris Beauchamp said investors had the chance of focusing back on the earnings season.
“Some stocks may suffer on disappointment that a big [US] infrastructure bill is not likely any time soon, while further financial deregulation may be harder theme to push for Trump.
“Overall, markets now have one less thing to worry about, although we are not short of other issues,” he said.
In the US, shares in healthcare companies rallied, with US health insurers reaching record highs, as results of mid-term elections were seen reducing the likelihood of action to cut medical costs and programmes in the world’s biggest and most profitable market.
Both the Democrats and Republicans are agreed on the need to bring US healthcare costs down but are deeply divided on how.
“This is probably the best-case outcome for pharmaceutical and biotech stocks,” said Lorenzo Biasio, healthcare analyst at Credit Suisse’s private banking unit.
US drugmakers such as Merck, Pfizer, and Johnson & Johnson, which have substantial facilities in Ireland, rose strongly, by over 2%.
In the European healthcare sector, drugmakers Sanofi, Roche, AstraZeneca, and GlaxoSmithKline, also gained around 1% each, as did medical devices group Smith & Nephew.
Additional reporting Reuters