Relieved global stock markets surged higher today as an abrupt U-turn
by US Federal Reserve chairman Ben Bernanke sent investors piling back into
Bernanke's comments that the US needs "highly accommodative" monetary policy "for the foreseeable future" calmed fears over an early slowdown of the Fed's money-printing programme, which has shaken equity and bond markets for the past month. Minutes of its meeting also revealed deep divisions among policymakers.
London's FTSE 100 gained almost 1 percent on the news, riding a wave of Asian gains following the biggest rise in seven months for China's Shanghai composite index. Hong Kong's Hang Seng rose 2.6 percent. US Treasury yields fell as the immediate prospect of tapering from the Fed, currently spending $85 billion (pounds sterling 57 billion) a month on government bonds and mortgage securities, receded. Oil prices rose amid hopes of higher demand and the pound reclaimed some of the recent ground lost against the dollar.
The FTSE 100 had been closing in on all-time highs before Bernanke's comments spooked investors. IG markets analyst Chris Beauchamp said: "This seems to set the stage for a push back to, and possibly beyond, recent highs for stock markets."
(c)2013 London Evening Standard
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