LONDON MARKETS: FTSE 100 Closes At Record High As Miners Surge After Fed Meeting
March 16 2017 - 1:08PM
Dow Jones News
By Carla Mozee and Sara Sjolin, MarketWatch
Pound climbs as dissent over rate view at Bank of England
emerges
U.K. stocks ended at record levels Thursday, with mining shares
invigorated by a pullback in the dollar and a major investment in
Anglo American PLC, while the pound surged on a hawkish development
on interest rates at the Bank of England.
The FTSE 100 climbed 0.6% to close at 7,415.95, surpassing its
previous record closing high of 7,382.90 logged on March 1. The
index on Wednesday finished up by 0.2%.
The fresh all-time high on Thursday was led a jump in the basic
materials and oil and gas groups. Those sectors make up a more than
20% weighting on the British benchmark, according to FactSet
data.
Anglo American PLC (AAL.LN) topped the gauge as its shares
jumped 8.6%. The surge came after billionaire Anil Agarwal's family
trust, Volcan Investments Ltd., bought a 12% stake
(http://www.marketwatch.com/story/indias-agarwal-takes-12-stake-in-anglo-american-2017-03-16)
in the producer of iron ore, copper and other metals. The purchase
makes Volcan the second-biggest investor in Anglo American.
BOE rate call: The FTSE 100 slightly pared gains midday as the
pound jumped above $1.23 for the first time since early March. That
surge came after the Bank of England voted to hold the benchmark
rate at 0.25% by 8-1
(http://www.marketwatch.com/story/bank-of-england-votes-8-1-to-hold-key-rate-at-025-2017-03-16),
with board member Kristen Forbes favoring a rate hike. U.K.
inflation looks set to rise above 2% in the "next few months," the
bank said.
"Even with inflation expected to breach the central bank's 2%
target this year and unemployment at its lowest since the 1970s,
the bank is keen to keep rates low ahead of Article 50 and two
years of uncertain Brexit negotiations," said Tom Stevenson,
investment director for personal investing at Fidelity
International, in a note.
"The danger this presents is the bank getting behind the curve
as price pressures increase. When it comes to inflation, you can't
put the toothpaste back in the tube," he wrote.
The pound climbed to $1.2365 from $1.2291 late Wednesday in New
York. Pound weakness since the Brexit referendum last June has
helped push shares of London-listed multinational companies higher
on the prospect sterling's lower value will boost their earnings
and sales made overseas.
The yield on the 10-year gilt rose further after the BOE
statement, up 4 basis points to 1.25% as prices fell, according to
electronic trading platform Tradeweb.
The policy decision is set to be the last before U.K. Prime
Minister Theresa May triggers Article 50
(http://www.marketwatch.com/story/uks-brexit-bill-approved-by-the-queen-reports-2017-03-16),
the bill that paves the way for the start of the Brexit
process.
See: May doesn't back second Scottish independence vote
(http://www.marketwatch.com/story/uk-prime-minister-doesnt-back-second-scottish-independence-vote-2017-03-16)
Miners: Shares of other metals producers pushed higher alongside
Anglo American as the sector was also aided by a pullback in the
dollar . The dollar late Wednesday fell roughly 1% after U.S.
Federal Reserve Chairwoman Janet Yellen signaled the central bank
will remain on a gradual pace of raising interest rates
(http://www.marketwatch.com/story/fed-raises-interest-rates-by-a-quarter-point-sees-two-move-moves-this-year-2017-03-15).
Read:Why the Fed interest-rate hike fueled a rally in gold
(http://www.marketwatch.com/story/why-the-fed-interest-rate-hike-fueled-a-rally-in-gold-2017-03-15)
Gold futures shot up 2.5% to trade above $1,230 an ounce.
Among miners, shares of Randgold Resources PLC (RRS.LN)(RRS.LN)
popped up 3.2%, Fresnillo PLC (FRES.LN) rose 3.9%, and Antofagasta
PLC (ANTO.LN) tacked on 4.7%.
Also in the resources sector, BHP Billiton PLC (BLT.LN) (BHP.AU)
(BHP.AU) climbed 2.6%, Glencore PLC (GLEN.LN) (GLEN.LN) rose 5%,
and Rio Tinto PLC (RIO) (RIO) (RIO) picked up 3.2%.
Other movers: J Sainsbury PLC (SBRY.LN) shares shed 1.2% as the
company said supermarket sales fell 0.1%
(http://www.marketwatch.com/story/sainsburys-supermarket-sales-dip-2017-03-16)
in the nine weeks to March 11.
(END) Dow Jones Newswires
March 16, 2017 12:53 ET (16:53 GMT)
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