Markets: Fed sparks a markets feeding frenzy

Blue chip miners surged by as much as 13 per cent yesterday, pushing the FTSE 100 Index to its highest level since March in response to the US Federal Reserve’s third wave of quantitative easing.

Commodity stocks, highly sensitive to the wider economic environment, enjoyed double digit percentage rises, with Kazakhmys and Vedanta leading the way with gains of 93p and 128.5p respectively at 733p and 1,090p. The Footsie added 95.3 points at 5,915.6.

Michael Hewson, senior analyst at CMC Markets, said: “European markets have soared as investors gorged themselves on the prospect of unlimited free cash from the Federal Reserve over the coming months.”

He said the Fed’s decision, announced after European markets closed on Thursday, increased the likelihood that the European Central Bank would follow suit as it seeks to stop the single currency appreciating against the dollar.

Banks were also beneficiaries. Barclays rose 11.1p to 229.1p, Lloyds was 1.1p ahead at 40p and HSBC rose 16.3p to 584.4p.

Royal Bank of Scotland was 2 per cent ahead as it fired the starting gun on its flotation of its insurance business Direct Line. The long-anticipated move will see around 25 per cent or more of Direct Line offered in the initial share sale. Shares were up 5.1p at 279p.

NEW YORK: Wall Street pared gains but was up for the fourth straight day on the Federal Reserve’s aggressive new plan to stimulate the economy despite a fall in US industrial production last month.

The Dow Jones industrial average closed up 28.73 points, or 0.21 per cent, at 13,568.59 while the broader Standard & Poor’s 500 Index ended the day up 4.90 points, or 0.34 per cent, at 1,464.89. The Nasdaq Composite Index closed up 29.71 points, or 0.94 per cent, at 3,185.53.