London’s top flight accelerated out of the blocks to a record high as European markets cheered a US rate hike and a snub for populists in the Dutch elections.
The FTSE 100 Index surged 69.12 points to an all-time mid-session record of 7,440.75, driven at large by the US Federal Reserve’s decision to raise American interest rates by a quarter of a percentage point to a range of 0.75% and 1%.
The move was the second rate rise in three months, with the US central bank forecasting two further increases this year as the American economy continues to surge following the US election.
Elsewhere in Europe, Germany’s Dax rose by 1% and France’s Cac 40 was 0.7% ahead as investors breathed a sigh of relief at Dutch Prime Minister Mark Rutte’s election victory over far-right leader Geert Wilders.
Neil Wilson, ETX Capital senior market analyst, said the two events had caused risk appetite to return to the market in spades.
“The FTSE 100 index hit a record intra-day high as equity markets responded to last night’s decision by the US Federal Reserve to raise interest rates.
“Despite policymakers being more firmly agreed on three hikes this year rather than just two, markets took it as a dovish signal that the Fed is going to only cautiously tighten as the economy improves.
“The message was that the economy is firing but inflation is not going to be an issue.
“There’s a bit of relief too as the Dutch elections showed no strong support for populists, helping send the euro to a five-week high and lifting European equities.
“A softer dollar is also supporting the risk rally, particularly commodities.”
On the currency markets, the US fed and the Dutch elections were also looming large as traders also looked ahead to the Bank of England’s interest decision.
The Bank’s Monetary Policy Committee (MPC) looks set to keep interest rates on hold as Britain prepares to kick off formal divorce proceedings with the EU.
The pound eased back as the euro strengthened on the Dutch election result, pushing sterling slightly lower versus the European currency at 1.143.
Sterling was also down 0.3% against the US dollar, with the greenback recovering after recording post-Fed losses.
The price of oil continued to rise after official data showed US stockpiles had slipped into reverse from record highs.
Brent crude was up 1% to 52.32 US dollars a barrel.
In UK stocks, Anglo American was in the ascendancy after Volcan Investments snapped up a 12% stake in the mining giant.
The £2 billion grab by Volcan, the family trust of Indian billionaire Anil Agarwal, caused Anglo shares to surge more than 8%, or 106.5p to 1,301p.
Miners also dominated the rest of the biggest risers, with Fresnillo up 102p to 1,555p and Antofagasta rising 52.5p to 859p.
Sainsbury’s eased back after it said trading remains “very competitive” and warned over ongoing price pressures from the weak pound as it saw supermarket sales slip.
The group posted a 0.5% fall in like-for-like supermarket sales, excluding fuel, in its fourth quarter to March 11, down from a rise of 0.1% in the previous three months.
Shares in the Big Four grocers fell 2.1p to 269.3p.
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