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Friday, January 21, 2022

UK’s FTSE touches new record highs as gold miners rally

UK's FTSE touches new record highs as gold miners rallyLONDON: Britain’s benchmark share index touched new record highs on Thursday, with gold miners outperforming, after the U.S. Federal Reserve suggested a less aggressive timeline for raising interest rates.

The blue-chip FTSE 100 index rose as much as 0.5 percent to set a record high of 6,982.79 points, beating its earlier record of 6,974.26 points set on March 2. The FTSE then settled back a touch to trade up 0.2 percent at 6,957.32 points.

Traders said the FTSE also drew support from Wednesday’s pre-election Budget statement from finance minister George Osborne, who announced modest increases in Britain’s expected economic growth for 2015 and 2016.

“The budget statement and the Fed are keeping things looking pretty bullish and the FTSE should test the 7,000 record point level soon,” said Thames Capital Markets’ chief strategist Nav Banwait.

The FTSE’s rise tracked similar gains on other world stock markets after the Fed’s statement late on Wednesday.

The Fed dropped the word “patient” from its statement in terms of raising interest rates, as expected, but also downgraded its views on the economy and inflation and lowered its interest rate trajectory. That signalled a far more gradual path to policy normalisation than many investors had foreseen.

Gold and silver miner Fresnillo rose 3.1 percent, among the best-performing FTSE stocks in percentage terms, while rival gold miner Randgold also rose 1.4 percent.

Those gold miners were boosted by an advance in the price of gold following the Fed statement. The Fed’s cautious tone pushed down the price of the U.S. dollar on currency markets, which in turn boosted the comparative appeal of gold.

However, clothing retailer Next fell 5.4 percent after the company’s cautious outlook took the shine off a 12.5 percent rise in annual profits. The stock had hit a record high on Wednesday.

BESI Research analysts kept a “sell” rating on Next but others remained upbeat on Next’s prospects.

“A history of innovation, coupled with a strong macro environment, means Next remains a robust stock for investors,” said Ketan Patel, senior analyst at Ecclesiastical Investment Management, which owns Next shares.

Copyright Reuters, 2015

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