FTSE 100 index opens up as oil prices surge lifting oil companies and miners including Anglo American and Glencore ahead of the Bank of England’s interest rate decision
The FTSE 100 index opened up this morning as markets priced out a further interest rate increase by the Federal Reserve this year, in turn causing the dollar to slide and the price of oil to rally.
The UK's blue chip index rose 1.46 per cent to 5,924 points ahead of the Bank of England's latest interest rate decision, led higher by Anglo American and Glencore.
"Yesterday’s comments from William Dudley of the New York Fed point to an increase in anxiety on the FOMC about a tightening of monetary conditions, the effect of a strong US dollar, and the slowdown in global growth prospects, which could keep the Fed on the side-lines in the short and medium term," said Michael Hewson, chief markets analyst at CMC Markets. "It would appear that these comments provided the catalyst for yesterday’s slide in the US dollar and rebound in oil prices, which in turn helped provide the catalyst for last night’s rebound in US stock markets."
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It is this rebound late yesterday that looks set to help European markets open sharply higher this morning, and could also provide a catalyst for energy stocks as well, he added.
Shell's share price jumped 4.63 per cent to 1,501p in early morning trading despite reporting that earnings had fallen by 80 per cent.
Meanwhile, BP's share price also rose 3.29 per cent to 343.3p, despite having tumbled this week when it reported worse than expected results.
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But it was miners who led the charge, Anglo American rising 9.23 per cent to 298.95p per share, while Glencore was up 5.82 per cent at 90.87p per share. BHP Billiton rose 5.72 per cent to 680p per share.
Of the small number of companies that fell on the FTSE 100 this morning, AstraZeneca dropped the most after warning on profits. Its share price fell 3.12 per cent to 4,273p per share.
While no change is expected, investors will now look to the Bank of England's latest monetary policy decision and the publication of its quarterly inflation report.