17th Dec 2015 08:32
LONDON (Alliance News) - UK equities joined other global stock markets by shooting higher at the open on Thursday, after the US Federal Reserve raised its interest rate for the first time in nearly a decade and indicated gradual further increases as economic conditions improve.
The Federal Open Market Committee was unanimous in its decision late Wednesday to raise the target for Fed Funds rates by 25 basis points to 0.25% to 0.50% from 0% to 0.25%. Looking further out, the Fed sees only "gradual" rate hikes in 2016, according to its so-called 'dot plot' of FOMC member forecasts. From there, the policy makers expect even slower rate hikes in 2017-2018.
In its statement, the Fed said it will "assess realized and expected economic conditions relative to its objectives of maximum employment and two-percent inflation" to decide upon further interest rate changes. The FOMC expects economic conditions to support gradual increases to interest rates, but it will depend on incoming economic data.
Wall Street was buoyed by the Fed's decision and tone of its statement and Yellen's press conference. The Dow Jones Industrial Average ended up 1.3%, the S&P 500 index closed up 1.5%, and the Nasdaq Composite ended also ended up 1.5%.
The FTSE 100 was up 1.4% at 6,146.83, with Standard Chartered up 3.2% and HSBC Holdings up 2.1% up after the Fed's decision. The FTSE 250 traded up 1.0% to 17,249.12, and the AIM All-Share was up 0.5% at 722.15.
European stocks also soared at the open with the CAC 40 in Paris up 2.0%, the DAX 30 in Frankfurt up 1.9% and the Euro STOXX 50 up 1.9% as well.
Asian equities closed higher after the Fed's decision. The Nikkei 225 index ended up 1.6%, the Shanghai Composite ended up 1.8% and the Hang Seng in Hong Kong closed up 0.8%.
London Stock Exchange Group was up 1.7% after the bourse operator said it has seen a good performance across each of its businesses in the eleven months to end-November.
In the Information Services segment, the LSE cited good momentum in the integration of FTSE Russell and delivery of synergies, whilst in the Post Trade Services segment, the LCH. Clearnet business delivered a good performance, it said.
In Capital Markets, primary markets were robust, LSE said, with GBP40 billion in equity capital raised on the markets for the period, down 2% from the previous year in more challenging market conditions. Secondary markets saw average daily UK equity value traded up 9%, and Italian average daily volumes up 7%.
Entertainment One was amongst the top gainers in the FTSE 250, up 3.8%. The media company said it has created a new partnership, forming a new film, television and digital content creation company, Amblin Partners, in association with Steven Speilberg and others.
The partnership extends its output agreement with DreamWorks pictures. Along with Spielberg will be Jeff Skoll and Anil Ambani. Under the agreement Entertainment One will directly distribute Amblin Partner's films, and it will hold a small equity stake in Amblin Partners.
Domino's Pizza Group traded up 2.1% after Berenberg upgraded the pizza delivery group to Buy from Hold. This comes after the company said late Tuesday it has formed a joint venture to acquire Joey's Pizza, the biggest player in Germany, for up to EUR79.0 million.
Elementis was the worst performer in the mid-cap index, down 7.6%. The speciality chemicals company said its earnings per share for 2015 is now projected to be at the lower end of the range of market expectations, as challenging markets continued.
However, the company said it still expects its year-end net cash balance to be higher than the previous year balance of USD64.2 million. Elementis said its operating profit in 2015 has benefited from around USD5 million in one-off gains related to legal settlements and property easements which will not be repeated in 2016.
Still ahead in the economic calendar, German IFO business climate survey results are at 0900 GMT, the European Central Bank's monthly economic bulletin is also released at 0900 GMT. At 0930 GMT is UK retail sales for November, which will include Black Friday, before eurozone construction output at 1000 GMT.
In the afternoon, US initial and continuing jobless claims are at 1330 GMT, alongside current account, and Philadelphia Fed manufacturing survey is at 1430 GMT.
By Neil Thakrar; [email protected]; @NeilThakrar1
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