LONDON MARKETS: Commodity Shares Push FTSE 100 Higher; Anglo American Surges 20%
05 February 2016 - 4:16AM
Dow Jones News
By Carla Mozee, MarketWatch
BOE's Carney says next interest-rate move likely to be
higher
U.K. stocks climbed Thursday as commodity shares rallied on a
drop in the U.S. dollar, but the pound was whipped around as the
Bank of England left interest rates unchanged but suggested the
next move is likely to be up.
The FTSE 100 rose 1.1% to close at 5,898.76, with shares in
miners and oil and gas companies leading the benchmark to its first
win in four sessions.
The moves came as the dollar lost ground against major rivals
Thursday. The fall extended losses from Wednesday, when the dollar
was crushed
(http://www.marketwatch.com/story/risk-averse-investors-plunge-anew-into-japanese-yen-shunning-dollar-2016-02-03)
after disappointing U.S. economic data was seen as putting
interest-rate increases by the Federal Reserve on hold.
Oil and metals prices benefited from the dollar's pullback, as
it makes them less expensive to buy for holders of other
currencies. In turn, resource shares pushed higher. Iron ore and
platinum miner Anglo American PLC (AAL.LN) surged 20%, its biggest
one-day percentage gain since 2008. Rio Tinto PLC (RIO) (RIO) (RIO)
jumped 10% and BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) rose
11%. Glencore PLC (GLEN.LN) gained 16% although the commodities
miner and trader's debt rating was cut by Standard & Poor's to
BBB-, to the lowest level of investment grade, on sector
challenges.
"After huge declines, the sector has finally decided enough is
enough, and is treating short sellers to some of their own
medicine," said Chris Beauchamp, senior market analyst at IG, in a
note.
"Signs of a pickup in Chinese iron ore demand have begun to
encourage bargain hunters within the sector, in the hope this might
feed through to other metals as well. Maybe, just maybe, the sector
is now the value play that investors were looking for," he
added.
Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) shares leapt 6.1%
although the oil major posted a near-60% slide in fourth-quarter
profit
(http://www.marketwatch.com/story/shell-profit-falls-almost-60-on-oil-slump-2016-02-04).
Shares of BG Group PLC (BG.LN), which is being bought by Shell,
picked up 4% and BP PLC (BP.LN)(BP.LN) claimed a 5.6% rise.
Swerves in sterling: The pound , meanwhile, was buying $1.4589,
down from $1.4603 late Wednesday. The pound earlier hit an intraday
high of $1.4669, according to FactSet, as the dollar struggled with
its selloff.
The pound turned lower in afternoon trade, fetching as low as
$1.4503 after the Bank of England decided to hold its key interest
rate at 0.5%
(http://www.marketwatch.com/story/bank-of-england-holds-key-rate-at-05-in-unanimous-decision-2016-02-04),
where it has been since March 2009, as expected. The unanimous 9-0
decision came as inflation and growth outlooks for the U.K. have
been dampened by the collapse in oil prices and downside risks for
the global economy.
The central bank cut its 2016 U.K. growth forecast
(http://www.marketwatch.com/story/boe-cuts-forecasts-for-uk-economic-growth-2016-02-04)
to 2.2%, from 2.5% previously.
But the pound began to reverse losses, trading back above $1.46
after Bank of England Governor Mark Carney said the next move for
the key rate is likely to up, not down, and that view was shared by
all of the members of the Monetary Policy Committee.
Investing Insights: A global markets survival guide
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for investing opportunities and risks in European and global
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The event is free and open to the public, but reservations are
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(END) Dow Jones Newswires
February 04, 2016 12:01 ET (17:01 GMT)
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