19th Sep 2013 16:32
LONDON (Alliance News) - London's main stock indices Thursday ended higher after the US Federal Reserve's decision to keep pumping money into the US economy at the existing rate caused a global stock market rally.
A rally that started on Wall Street after the announcement and saw the Nasdaq and S&P 500 hit all-time closing highs, continued into Asia and then Europe.
The FTSE 100 closed up 1% at 6,625.39, the FTSE 250 closed up 0.3% at 15,137.10 and the AIM All-Share closed up 0.9% at 789.80.
Fed Chairman Ben Bernanke said the central bank would continue pumping USD85 billion a month into the US economy until it is sure the economic recovery is sustained and is feeding through into lower jobless numbers.
The news lifted gold and oil prices, but the dollar fell sharply, including against the pound with sterling hitting a high of USD1.6163, its highest level since January.
Sterling then slid back to about USD1.6050 after the release of weaker-than-expected UK retail sales data. Sales for August fell 0.9% against a forecast rise of 0.4%, while year-on-year the reading was up 2.1%, against a forecast rise of up 3.3%. It was the weakest UK economic data figure for weeks, but retail sales figures tend to be volatile on a monthly basis.
"Monthly retail sales figures are volatile. Volume is still 2% up year on year and monthly volume is still the second highest in history," Former Bank of England rate setter Andrew Sentance said on Twitter.
Gold mining and metal companies led the gainers in London Thursday as the yellow metal shot up 4% as the dollar fell in the wake of the Fed announcement.
Randgold Resources was the top blue chip gainer, closing up 8.1%, while Fresnillo gained 6.4%. On the FTSE 250 gold stocks also led, with African Barrick Gold closing up 15% on the day. The company also appointed Andrew Wray as chief financial officer, succeeding Kevin Jennings whose resignation was announced earlier this year. Wray has been instrumental in transitioning the gold producer to a public company and led the company-wide operational review which has identified over USD185 million of potential cost saving initiatives.
In the wake of Bernanke's focus on jobs, Thursday's US jobless claims data should have taken on more importance, but was again spoiled by glitches affecting US government computer services in California and Nevada that created a backlog in the processing of new claims.
Initial jobless claims rose by 15,000 in September to 309,000 against a consensus forecast of 330,000, while continued claims reduced by 28,000 to 2.787 million against a forecast 2.9 million. The figures were largely ignored by the market.
However, there was more positive data to follow. US existing home sales showed an unexpected increase in August, up 1.7% against a forecast decrease of 2.6%, the biggest rise since November 2007. The Philadelphia Fed Manufacturing Survey posted a huge rise to 22.3, up from 9.3 previously and against an expected reading of 10.
Analysts now expect the Fed to start tapering its stimulus measure at its December meeting, as they don't expect it to change it's mind in just one month, even if the data continues to be positive. Friday, estate agents Foxtons will list in London, while the economic calendar has UK public sector borrowing at 0930 BST, EU consumer confidence at 1500 BST and post-embargo speeches from individual FOMC members begin with Esther George and James Bullard after the European market close.
By Jon Darby; [email protected]; @jondarby100
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