An investor looks at an electronic board showing stock information at a brokerage house in Shanghai.
London: Europe’s stock markets pushed higher yesterday, with London striking a new record high, after the Federal Reserve painted a positive picture of the world’s largest economy.
The dollar recovered a day after stumbling as the US central bank lifted interest rates by a quarter-point but gave a more dovish outlook for future hikes than many had expected.
Meanwhile the pound got a boost after the Bank of England signalled it was looking to tighten monetary policy in the future, although as expected it kept rates on hold for the moment.
Sentiment was buoyed also by the victory of the incumbent party in Dutch elections.
London stocks jumped higher with solid gains in the mining sector, which benefited from hopes of rising demand in a healthy world economy, striking a new high of 7,444.62 points.
In the eurozone, Frankfurt stocks also fizzed higher as dealers toasted the Fed.
However, Paris gains were tempered by accusations of a emissions-cheating scandal at Renault, which sent the French carmaker’s stock skidding four percent lower. Renault has emphatically decided the allegations.
“It’s all about the Fed,” Will Hamlyn, senior equity investment analyst at Manulife Asset Management, told AFP.
“There was no surprise that rates are going up but they’re just been doing a fantastic job in managing expectations. Rates are still going to go up in line with... expectations, it’s just that traders had booked positions that the trajectory of steepening would accelerate. Last night there was a bit of an unwinding on that.”
Anglo American shares topped the FTSE 100, soaring 8.4 percent to 1,295 pence.
The group gained also from news late Wednesday that Indian mining billionaire Anil Agarwal’s holding company, Volcan Investments, was set to buy up to £2.0bn of stock ($2.5bn, €2.3bn).
Elsewhere in London’s mining sector, Antofagasta, BHP Billiton, Fresnillo and Randgold each won between three and five percent.
“The global economy is going really well and the mining stocks this morning in the UK are flying, and that is what is leading the market up,” added Hamlyn.
Wall Street opened higher yesterday, a day after a much-anticipated meeting at which the US central bank lifted borrowing costs by a quarter-point but suggested only another two rises this year, confounding talk of a possible three or four.
Fed boss Janet Yellen also said that while President Donald Trump’s planned big-spending, tax-cutting plans could fuel growth and inflation, she would keep a wait-and-see stance.
The news, which came with an upbeat assessment of the world’s top economy, lit a fire under US stocks and sent the greenback tumbling in US trade.
And that continued into Asian business, with Hong Kong up 2.1 percent and Shanghai adding 0.8 percent.
The Fed move led Hong Kong’s de facto central bank to lift its own borrowing costs owing to a monetary policy link, and the Chinese central bank to lift short-term rates it charges banks to borrow cash in a bid to prevent a flood of cash out of the country and support the yuan.
Dutch Prime Minister Rutte easily defeated anti-EU candidate Wilders in a vote considered a bellwether of populist support in Europe. The victory raised hopes extremist parties in France and Germany will also be held off in elections later this year.
The vote “takes a very unlikely event off the table which is marginally positive—but I don’t think anyone was really expecting he (Wilders) was going to win”, noted Hamlyn.
