The FTSE 100 (^FTSE) index is dominated by large international companies, which means Donald Trump's US election win could also have major implications for a number of these UK-listed businesses.
US stocks notched their best week of the year, with the S&P 500 crossing the 6,000 points mark for the first time, in a market rally spurred by Trump's victory. The S&P 500 (^GSPC) is now up nearly 26% year-to-date.
Markets in the US continued to climb at the start of the week, as the Republican party edged closer to taking overall control of Congress, having already secured a majority in the Senate and only needing a small number of seats to take the House of Representatives.
This has buoyed expectations that Trump will be able to push ahead with his agenda, including plans for lower taxes, deregulation and tariffs, when he returns to office in January.
The FTSE 100 also rose following the election result, though investor optimism wasn't quite on the same level as in US markets, with the UK's blue-chip index up 4% year-to-date.
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Richard Hunter, head of markets at Interactive Investor, said: "Despite the fact that there are factors in favour of the FTSE 100, this has yet to wash through following the election result, such that the initial reaction has been largely negative for the premier index."
For example, Hunter pointed out that an estimated 70% of earnings in the FTSE 100 index come from overseas, a large proportion of which is from the US, which "should be positive if the US economy moves on to a new era of growth".
The result also strengthened the dollar, weakening the pound (GBPUSD=X), which Hunter said "should have resulted in another boost for the FTSE 100, since earnings will become more valuable when repatriated to the UK".
However, Hunter said that reports that the UK may avoid the worst of any potential trade tariffs from Trump had resulted in stronger start to the week for UK markets, "but whether the momentum will be maintained remains to be seen".
In terms of individual stocks, here are some of the FTSE 100 companies that experts believe that could be most impacted by Trump's election.
Donald Trump's US election win could have major implications for a number of businesses listed on the FTSE 100. ·Win McNamee via Getty Images
US election FTSE winners
In terms of sectors, Susannah Streeter, head of money and markets at Hargreaves Lansdown (HL.L), said "Trump's win is seen as a net positive for traditional infrastructure".
The vast majority of its revenue comes from the US, so the "new Trump presidency could help accelerate its recovery after a few tough quarters", according to Streeter.
Ashtead is one of the largest equipment rental companies, providing industrial and construction machinery to a range of sectors.
The company's shares rallied following the election result and have eased back since but are still up 14% over the past year.
In its fiscal first quarter results, released in September, Ashtead logged just 2% growth in revenues to $2.8bn versus the same period in the previous year, though this was in line with forecasts. The company also posted a 7% fall in profit before tax at $544m. However, Ashtead said it expected full-year results to be in line with expectations.
Streeter said that while performance had "slowed compared to last year's record levels ... the underlying business remains strong and Trump returning to the White House could offer another tailwind for growth".
Trump's policies are expected to drive inflation higher. Given this data is monitored closely by central banks to help guide interest rate decisions, this means rates could stay higher for longer.
The US Federal Reserve cut interest rates by a quarter percentage point in its November meeting, though this was still at range of 4.5%-4.75%.
Streeter said that rates remaining elevated is "likely to be a tailwind for banks as can boost net income margins".
"Barclays is one of the largest global investment banks and has a sizeable US credit card business so has the potential to make more money on loans in such an environment," said Streeter.
"However, further ahead there is a risk that higher borrowing costs could affect US economic growth further down the line and push up default rates again."
Another expected focus for the new Trump administration is deregulation and lower taxes.
"A lighter regulatory touch might reduce compliance costs and stimulate capital markets through favourable policies, which Barclays could also benefit from," Streeter said.
IHG stock rose on the back of the election result. The company has around 4,000 hotels operating under its brands in the US.
Streeter said it is also "expected to gain from a Trump tax cut spree which could put more money in the pockets of consumers and keep business travel more buoyant."
This hotel theme also indirectly boosted shares in Pershing Square — the FTSE-listed investment trust run by billionaire fund manager Bill Ackman — given its largest holding is Hilton Worldwide (HLT), Interactive Investor's Hunter said.
Google-owner Alphabet (GOOGL, GOOG) is another holding in the trust's portfolio and Hunter said that the "mega-cap technology sector is likely to see a short-term boost from the measures which the new president may well introduce".
Hunter said that defence companies such as BAE Systems could benefit from increased spending in this sector.
He said that this was based not only on conflicts in the Ukraine and the Middle East, but "also on Trump’s previous rhetoric on the need for other countries to up their spending in comparison to the US contribution to NATO".
US election FTSE losers
Trump looks set to push ahead with his agenda, including plans for lower taxes, deregulation and tariffs, when he returns to office in January. ·Anadolu via Getty Images
Dan Coatsworth, investment analyst at AJ Bell, said that oil majors Shell and BP are examples of the more obvious "losers" from Trump's election.
"His 'drill, baby, drill' mantra creates the potential for more oil and gas exploration in the US," said Coatsworth.
"If US companies make big discoveries, it could increase supplies and weigh on oil and gas prices. Naturally, that has a direct read-across to BP and Shell as it could impact their earnings."
Oil prices have been volatile recently, as investors follow developments in the conflict in the Middle East, as well as around China's sluggish economy, as the world's largest crude importer. Brent crude futures (BZ=F) slid 2.7% on Monday to $71.85 a barrel, while US West Texas Intermediate (CL=F) was down 3.2% to $68.10 a barrel.
She said that "there will be concern that if higher tariffs are slapped on imported drinks, that more US consumers will turn to home grown tipples instead".
"There could be a knock-on effect for regions such as Latin America and Caribbean where customers have already been trading down to cheaper alternatives," Streeter said.
"If Trump’s trade policies end up dampening down regional growth, it could have a fresh detrimental effect on sales."
In its 2024 preliminary results, released at the end of July, Diageo reported a 0.6% dip in overall organic net sales, with the biggest decline of 21% recorded in the Latin America and Carribean.
Consumer goods company Unilever (ULVR.L) also risks being caught up in the knock-on effect of higher tariffs, Streeter said.
She pointed out that Unilever has manufacturing bases in both Mexico and China, "two countries Donald Trump has threatened to hit hard with higher duties".
"The Hefei Industrial Park in China is Unilever’s largest production base in the world where 10 million products a day are manufactured for brands such as Dove, Clear and Lux," she said.
"While it’s still unclear if Trump’s campaign trail rhetoric will become reality, this is set to be a much tricker trade era to navigate for the multinational company."
Indeed, there is still some time before Trump returns to the White House in January, though as his administration starts to take shape, it could become clearer as to what to expect on policies and how major international companies will be impacted.
