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Miners drive FTSE higher as Yellen sends dollar diving

Mining stocks race higher as US Federal Reserve chair surprises markets with dovish tone, boosting riskier assets.

 
Miners drive FTSE higher as Yellen sends dollar diving

Miners have lifted the FTSE 100 after Janet Yellen sent the dollar diving by striking a more dovish tone than her colleagues at the US Federal Reserve.

The UK blue-chip index rose 91 points, or 1.5%, to 6,197, with shares of mining companies rocketing as the Fed chair's claim that the US needed to 'proceed cautiously' with interest rate rises gave a shot in the arm to riskier assets.

Yellen's speech sent the dollar diving, reaching $1.443 against the pound overnight before settling at $1.439. That provided a boost to commodities, which are priced in the US currency. Miners at the top of the index included:

  • Anglo American (AAL) +10.2% at 527.6p;
  • Glencore (GLEN) +6.7% at 153.4p;
  • BHP Billiton (BLT) +5.5% at 791.2p;
  • Rio Tinto (RIO) +5.2% at £19.60
  • Antofagasta (ANTO) +3.5% at 470p.

'UK-listed miners are benefiting from an understandable increase in risk appetite based on expectations of lower global interest rates and accommodative policy for longer coupled with now quasi-certainty that April is off the table in terms of another US rate hike,' said Mike van Dulken, head of research at Accendo Markets.

'Markets had been gearing up for a more hawkish update in light of recent Federal Open Market Committee member commentary, however the Fed chair took the dove firmly by the wings to leave markets in no doubt that external factors (China, oil) play just as much a part in the pace of policy normalisation as improved US macroeconomic data.'

Yellen's speech also provided a boost to emerging markets stocks, with Standard Chartered (STAN) up 7.7% at 473.5p and Burberry (BRBY), which relies on China for a big portion of its business, 2.8% higher at £13.56.

Oil stocks were also in the ascendancy, as the price of Brent crude rose 1.45% to $39.67, with BP (BP) up 3.1% at 356.8p and Shell (RDSb) rising 2.4% to £17.08.

On the FTSE 250, emerging markets-focused fund manager Aberdeen Asset Management (ADN) rose 6.4% to 273.1p while miners and oil stocks made strong gains.

Evraz (EVRE) jumped 6.7% to 88.2p, Vedanta Resources (VED) was up 5.4% at 331.3p and Kaz Minerals (KAZ) traded 4.9% higher at 165.3p.

Among 'small cap' stocks, Premier Foods (PFD) rose 7.1% to 60.3p as US rival McCormick & Co returned with a second offer for the business, valuing it at 65p per share.

The rally in miners meanwhile propelled shares in the BlackRock World Mining (BRWM ) investment trust 3.8% higher at 218.2p.

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  • Anglo American PLC (AAL.L)
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Top 10 active investment trusts

by Jennifer Hill on Dec 02, 2016 at 07:14

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