London’s blue-chip stocks rose for the third consecutive day following the Federal Reserve’s decision to raise interest rates in the US.
The central bank of the United States on Wednesday delivered its first interest rate hike since 2006, raising by 0.25% from the 0% level seen over the last seven years.
Ben Brettell, senior economist at Hargreaves Lansdown, said: “It’s the first sign that the patient is recovering well enough to be weaned off the medicine.”
In the UK, analysts were predicting what the rate hike might mean for the Bank of England.
Bretell said: “Where the Federal Reserve leads, the Bank of England could follow, but not just yet.”
He said the Fed hike “opens the door” for the BoE to make its first rise next year, though notes that conditions are not the same in the UK as they are in the US.
Meanwhile, Michael Hewson at CMC Markets, said the decision in the US gives the BoE’s Mark Carney “the opportunity to perform another about turn in the New Year, perhaps, when things come into sharper focus.”
Markets responded well to the rate hike, with the Dow Jones Industrial jumping 1.3% to 17,749. The S&P 500 surged 1.4% to 2,073. The Nasdaq Composite was also up 1.5% at 5,071.
In the UK, the FTSE100 also had the feel-good feeling, joining its American counterparts with a 1.5%, or 90 point, gain to 6,151.
There were only three fallers on the index, which saw big gains for Standard Chartered (LON:STAN).
Reports suggest the bank has axed around six of its oil and gas advisory roles, ending attempts to build a global mergers & acquisitions (M&A) team.
It’s part of the restructuring at the bank, as chief executive Bill Winters looks to slash costs. Shares jumped 6.3% or 32p to 545p.
Also higher was pharma giant AstraZneca (LON:AZN), which agreed to take a majority stake in a Dutch-US rival for US$4bn.
Astra said it was taking a 55% interest in Acerta Pharma, which is developing a drug known as acalabrutinib to treat blood cancer and solid tumours. Shares rose 48p to 4,463p.
Away from the index, Entertainment One (LON:ETO) said it has a new extended deal with DreamWorks Pictures, though a new partnership company called Amblin Partners. Shares lifted almost 4.5%, to 7p, to 178p.
In the world of the small caps, mobile payment company Proxama (LON:PROX) has signed a new US$1mln deal with an existing client as revenue doubled in its second half compared to the first.
The group said it was in line to hit £3mln in sales for the full-year. Shares rocketed 45% to 0.8p.
Conversely, Ultimate Sports Group (LON:USG) dropped around 8.5% to 25p as it raised £200,000 through the issue of 1mln shares at 20p each.
The group, which encourages children between the ages of 4 and 11 to play sport, said the funds will be used for working capital as it looks to increase the number of coaches it trains.