Fed taper boosts markets

The London market rallied this morning following the US Federal Reserve’s landmark decision to begin tapering its stimulus programme.

The move was taken as an encouraging sign on the recovery of the US economy, whilst removing the uncertainty seen in recent weeks.

Investors this side of the Atlantic took their lead from their American peers, as the Dow Jones Industrial Average closed nearly 2 per cent higher on Wall Street last night.

The FTSE 100 Index opened about 1 per cent higher.

Investors were also cheered by comments from the Federal Reserve that interest rates were likely to remain near to zero for some time.

Mike van Dulken, head of research at Accendo Markets, said: “The Fed’s move has been driven by improved US data and political progress, and balanced by a reinforcement of forward guidance that interest rates will stay very low for a ‘considerable time after QE ends’ and until unemployment falls below 6.5 per cent.

“The dovish boost to forward guidance has served to reassure markets that stimulus-tapering does not equate to true policy-tightening.”