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FTSE rises for 7th straight day as China accelerates
by Chris Marshall on Oct 18, 2013 at 08:04
Accelerating Chinese economic growth helped Britain’s FTSE 100 rise towards its seventh straight day of gains, riding on the coattails of a record high for the US S&P 500.
The pound also continued to strengthen against a US dollar hit by signs that US stimulus will remain intact, after the 16 day US government shutdown that damaged the world’s largest economy.
Investors welcomed official data from China showing that GDP growth rebounded to 7.8% in the third quarter, year on year, from 7.5% in the previous three months. The improvement, which should soothe recurrent fears of a sharp slowdown, comes after a ‘mini stimulus’ package launched in early July.
However other China growth measures – industrial production, retail sales and fixed asset investment – all moderated slightly in September.
‘Since the 7.5% target looks much more within reach than three months ago, policymakers will probably have little appetite to step up policy easing for this year,’ commented Wei Yao of Societe Generale after today’s data dump.
Markets were also buoyed by indications that the US Federal Reserve’s stimulus scheme won’t be cut back as early as originally thought. The FTSE 100 leapt 0.5% to 6,608, matched by a 0.5% rise on Europe's Stoxx 50 and following gains across most of Asia.
Two Fed officials yesterday used speeches to signal delays in the tapering of the bond purchase programme.
This sentiment helped the S&P hit a record high of 1,733, even amid some weaker than expected corporate results. Google announced a $2.97 billion quarterly profit after the US market close.
The prospect of continued stimulus, as well as the economic impact of the government shutdown, has been weighing on the dollar this week. On Friday morning, the US dollar index fell to an eight and a half month low. The pound continued to make gains against the dollar, up 0.1% to $1.6183
The gold price added to Thursday’s big gains, rising another 0.4% to $1,324 an ounce.
The US jobs report that is used as a barometer for Fed thinking on stimulus will be published on Tuesday, having been delayed by the closure of US government departments.
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