US Election Day has arrived and relief turned to cautious unease in early trading. European stocks followed the small drift lower seen in Asian markets as investors brace themselves for the likelihood of election-induced volatility.
Whether the day finishes with the same quiet tone will depend on any election news including anything from polls to Trump gaffes to Clinton WikiLeaks emails.
The FTSE 100 was unchanged, just above 6,800 on Tuesday morning. Positioning in UK blue chip companies ahead of the US election looks defensive. Investors are seeking the safety of lower volatility utility shares while the healthcare sector, which has been sensitive to a possible clampdown on drug prices under the next President, was being shunned.
Two of Britain’s clothing retailers, Marks & Spencer (LON:MKS) and Primark-owner ABF (LON:ABF) were heading in different directions after reporting first-half results.
M&S shares dropped on Tuesday after it reported falling food and clothing sales in the first half of the year. M&S is shuttering 30 of its clothing stores and opening 200 new ‘Simply Food’ shops as part of a CEO Steve Rowe’s turnaround plan. It looks like the beginning stages of a capitulation. After years of trying to turn around its department store business, Steve Rowe has started to trim the fat. It’s a logical idea that should have been put in place years ago at M&S; when sales fall, close stores, if they rise again; opening stores is always an option.
Bank stocks were top fallers as Royal Bank of Scotland (LON:RBS) announced it was setting aside £400m to put into a compensation fund for small businesses that lost out because of the bad practises in its ‘Global Restructuring Group.’
US stocks look set for a lower open on Tuesday, a pullback after the major averages gained over 2% on Monday, snapping a nine-day losing streak for the S&P 500 that was its worst run since 1980.
USA pre-opening levels
S&P 500: 1 point lower at 2,130
Dow Jones: 24 points lower at 18,235
Nasdaq 100: 1 point lower at 4,772
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