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FTSE 100 marks 5-week high on Fed-fuelled rally

Last updated: 17:31 22 Sep 2016 BST, First published: 06:54 22 Sep 2016 BST

Federal reserve stamp over dollar bills

 

London stocks ended at a five-week high on Thursday as investors took comfort from the Federal Reserve’s decision to hold off a US rate hike the previous day.

The blue-chip FTSE 100 index ended up 1.1% at 6,911 – just shy of its intraday high of 6,937 and its best closing level since August 15.

The dollar fell after US rates were held, which pushed commodity prices up.

That led to rises in shares of mining companies, as the price of copper hit a one-month high and other metal prices increased.

Shares in miner Glencore (LON:GLEN) topped the blue-chip gainers, up 5.5% to 207.9p and Fresnillo (LON:FRES) was second, up 5.2% to 1802p. Third was Randgold Resources (LON:RRS) up 4.4% to 8015p.

The underlying message from the Federal Reserve was received loud and clear across global markets; “We’re still not hiking interest rates so go ahead and take some risk.” The risk-taking sentiment was evident in a rise in equities and commodities and a drop in the US dollar,” said Jasper Lawler, market analyst at CMC Markets.

In the FTSE 250, which at one point burst above 18,000 and ended up 0.3% at 17,987, shares in Kier Group (LON:KIE) rose 1.3% after the construction group reported a 45% increase in underlying full-year pre-tax profits to £125mln. The stock ended up 1% at 1293p. The mid-caps top riser was Hochschild Mining Plc (LON:HOC) up 8.2% to 291p.

Britain’s decision to leave the European Union is not expected to cause a major shock for the world economy, the European Central Bank said on Thursday, noting the impact of the referendum is set to be “regional rather than global”. It comes days after the British premier was on Wall Street to listen to investors’ concerns about Brexit.

The FTSE AIM 100 Index ended 0.4% higher at 3884 and the FTSE AIM All-Share Index up 0.3% at 813.

Rarely it happens, but Thursday was one of those days, when gainers in London outnumbered losers or unchanged, 39% rising, 26% falling and unchanged 35%.

London’s biggest riser overall was Ferrum Crescent (LON:FCR) up 46.5% to 0.315p after the metals miner on Thursday said it had exercised its option to acquire GoldQuest Iberica SL - the lead-zinc option in Spain - just ahead of deadline.

The biggest faller was Newmark Security (LON:NWT) down 35% to 1.45p after saying it expected said it now anticipates reporting a loss for the year to the end of April 2017 on slow-than-expected sales.


LUNCH

FTSE 100 was breaking away at lunch, up over 85 points as markets cheered the Fed response, or lack of it yesterday, which has sent the pound rallying.

The British pound against the US dollar rose 0.3% to  US $1.3071, up from a five week lower reached yesterday at US $1.2946.

The pound has been consistently weak since the vote to leave the UK on June 23.

Janet Yellen and the team decided to stand pat on interest rates in the US, although she did signal a rate rise was coming before the end of the year.

But markets liked the overall tone, and Wall Street shares gained yesterday, and European markets are up today.

FTSE 100 stands up 85.74 points, or 1.24%  at 6,919.

Senior analyst Chris Saint at Hargreaves Lansdown said: “Whether sterling can now hold above this level is very much open to question, as the meeting minutes showed most policymakers still see interest rates rising before the year end. While markets aren’t yet persuaded this is a done deal, a move in December would be the far more likely option given November’s meeting will be just a week before US Presidential elections.”

Big cap miners are winners on Footsie, while the biggest loser is HSBC (LON:HSBA), down 1.10% to stand at 582.20p.

Top London riser was Management Consulting Group PLC (LON:MMC), up over 40% to 21p , as it struck a deal with Accenture to sell  Kurt Salmon for a total cash of around US$165 million.

Seeing Machines (LON:SEE),  soared 24% higher to 4.5p on news of the introduction of its first generation FOVIO chip, which could become integral to semi-autonomous cars.

Chariot Oil and Gas plc (LON:CHAR) also continued the good run, up over 14% to 11p.

The group has been on a bit of a tear, since early September when the stock was worth around 5.6p. Last week, it revealed drilling plans and said it had more than enough cash to fulfill its licence commitments.

 

Big miners helped FTSE 100 higher at the open after the US Fed kicked the interest rate can further down the road yesterday.

 

The US Central Bank kept rates at the current level of between 0.25% and 0.50% but said there could be a hike before the end of the year.

US markets appeared to like the news, with the Dow Jones climbing 0.9% and the S&P500 adding 1.09%.

FTSE 100 is now up around 44 at 6,879, while European indices are also higher.

In small caps, FTSE AIM 100 is 0.35% to 3,884, while FTSE AIM All share is 0.31% higher at 814.040.

The biggest Footsie gainer was BHP Billiton (LON:BLT), up 4.14% to 1,094.5p.

A notable small cap riser was tech firm Seeing Machines (LON:SEE), which soared over 27% higher at 4.63p on news of the introduction of its first generation FOVIO chip, which could become integral to semi-autonomous cars.

The first iteration of the company’s technology is to be incorporated in vehicles rolling off the production line next year

FOVIO could be embedded as early as 2018.

Meanwhile, Aura Energy Ltd's (LON:AURA, ASX:AEE) saw shares boosted by over 11% to 1.95p as its move into gold exploration in Mauritania appears to have been a particularly well judged one.

It has two prime licences along the extensive Archean greenstone belts and today noted the “exceptionally strong” drill results from next door neighbour, TSX-listed Algold Resources.

Pub and eaterier group Mitchells & Butlers plc (LON:MAB) supped up over 2% to 207.60p as it reported a drop in its full year sales but a rise in the most recent eight weeks of trading.

Top London riser was Management Consulting Group PLC (LON:MMC), up over 41% to 24p, as it struck a deal with Accenture to sell  Kurt Salmon for a total cash of around US$165 million.

Opening snapshot at 8.30am

The FTSE opened 28 points higher at 6,873 on Thursday.

The top gainer on the FTSE 100 was mining giant BHP Billiton plc (LON:BLT), up 4% to 1097p.

Education specialist and publisher Pearson PLC (LON:PSON) was the morning’s biggest loser, dipping 2% to 767p.

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London’s FTSE 100 is set to open higher on Thursday as equity markets continued to get a lift from the US Federal Reserve’s decision to leave rates alone.

It was not wholly unexpected that Janet Yellen’s central bank would shun a rate rise but the fact there were more votes in favour of a move this time underlines that it was a live possibility.

Economic commentators now say a December rate rise is much more likely.

“We’ve learnt that the Federal Reserve is more divided than ever and that policymakers don’t appear to have a clue what is happening in the US economy, however the prospect of a rate rise by year end has become much more likely, which in the short term should be good for financials,” said Michael Hewson, analyst at CMC markets.

Wall Street ended Wednesday with a rally, once the Fed decision was in.

The Dow Jones gained 164 points, 0.9%, to finish the session at 18,293. The S&P 500 and Nasdaq, meanwhile, each added just over 1% to 2,163 and 5,295 respectively.

Asian stocks rallied in Thursday’s session with Japan’s Nikkei up 1.9% to 16,807, while Hong Kong’s Hang Seng added 0.4% to 23,762 and the Shanghai Composite rose 0.7% to 3,047.

Australian equities were also climbing, with the ASX 200 up 0.85% to 5,385.

Here in London, IG Markets sees  the FTSE 100 about 30 points higher, calling the blue chip benchmark at 6,873 to 6,877 about an hour before Thursday’s open.

Thursday’s headlines

The FT reports that a heavily divided Federal Reserve left short-term interest rates unchanged but said the case for a rate increase “has strengthened”. Three out of ten of the US central bank’s rate-setters voted against the decision, and called for an immediate increase.

Britain’s economy will hold up strongly for the rest of this year, defying warnings of an immediate Brexit collapse, the Organisation for Economic Co-operation and Development has predicted, reports the Telegraph.

The Telegraph also reports that a company offering the UK’s first online property ISA has secured £1.3m of backing from Zoopla and prolific venture capitalist Robin Klein ahead of its launch.

Bricklane.com aims to allow individuals to invest in the property market with a contribution of as little as £100.

The Times has an exclusive that the Serious Fraud Office has dropped a proposed criminal investigation into an agricultural lender accused of cheating them out of their homes and livelihoods.

The SFO told farmers yesterday that after conducting a “thorough and objective” review of the activities of the UK Acorn Finance group of companies, it had decided that it “cannot accept the case for investigation”.

The Mail, meanwhile, runs with the acquisition of Bernard Matthews by the owner of the 2 Sisters Food Group in a deal that will safeguard 2,000 jobs.

‘Chicken king’ Ranjit Boparan bought the struggling turkey giant from private equity group Rutland Partners through a pre-pack administration.

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