The FTSE 100 has rallied strongly since the open this morning with the index receiving a double boost from the US and Netherlands since Wednesday’s cash close. The benchmark is higher by approximately 70 points, whilst the pound is seen falling lower against most its peers.
Anglo American (LON:AAL) surges on £2bn investment
The mining sector is leading the charge into uncharted territory for the leading UK benchmark with some substantial gains seen in Anglo American, BHP Billiton (LON:BLT) and Glencore (LON:GLEN). These three large mining companies occupy three of the top five positions on the index with the sector as a whole rising after news broke that Indian tycoon Anil Agarwal has invested £2bn in Anglo American. The industry is continuing its recovery which began in 2016 after several years of struggles amidst a slump in commodity prices, and the announcement of a substantial investment from Mr. Agarwal shows a growing confidence in the mining sector.
US dollar drops after Fed rate hike
Wednesday evening saw a fall in the US dollar despite a rise in the Fed funds rate being announced, as it appears once more that markets are questioning the forward guidance given by the US central bank. There were a few upward revisions to the FOMC’s dot plot, however the median levels remained unchanged for this year and next which led to a fairly sharp drop in the buck. The reaction was similar in fashion to that seen after the latest US jobs report, where a seemingly positive development was met by skepticism and a softening of the US dollar, which begs the question of how high market expectations were going into these events and what would have been required to see the greenback appreciate. The drop in the US dollar saw precious metals rise with Gold surging around 2% and boosting both Fresnillo (LON:FRES) and Antofagasta (LON:ANTO) Holdings. Stock in these companies has risen by approximately 7.1% and 6.6% respectively.
Bank of England to adopt more hawkish stance?
The Bank of England will announce the outcome of its latest monetary policy meeting at Midday, with rates expected to be kept unchanged at 0.25%. However the Bank’s assessment of the economic outlook in the accompanying statement could make for interesting reading with the last meeting showing it remained steadfast in holding its dovish view. Since then the pound has gradually made its way lower as the Brexit bill has meandered through the houses of parliament and is now set to be made into law. Article 50 now seems nailed on to be triggered before the end of the month, and whilst it may open up a can of worms in itself the general feeling amongst market participants is that the Brexit procedure is progressing on track. This may allow the BoE a little more leeway in its stance and a slight hawkish tweak to the statement, something similar to the “limited tolerance” for above target inflation comment seen in December, is a possibility which could provide some support to the pound.