Britain’s benchmark share index touched new record highs on Thursday, with gold miners outperforming, after the US Federal Reserve suggested a less aggressive timeline for raising interest rates.
The blue-chip FTSE 100 index rose as much as 0.5 per cent to set a record high of 6,982.79 points, beating its earlier record of 6,974.26 points set on March 2. The FTSE then settled back a touch to trade up 0.2 per cent at 6,957.32 points.
Pre-election Budget statement
Traders said the FTSE also drew support from Wednesday’s pre-election Budget statement from finance minister George Osborne, who announced modest increases in Britain’s expected economic growth for 2015 and 2016.
“The budget statement and the Fed are keeping things looking pretty bullish and the FTSE should test the 7,000 record point level soon,’’ said Thames Capital Markets’ chief strategist Nav Banwait.
The FTSE’s rise tracked similar gains on other world stock markets after the Fed’s statement late on Wednesday.
The Fed dropped the word “patient’’ from its statement in terms of raising interest rates, as expected, but also downgraded its views on the economy and inflation and lowered its interest rate trajectory. That signalled a far more gradual path to policy normalisation than many investors had foreseen.
Gold miners rally
Gold and silver miner Fresnillo rose 3.1 per cent, among the best-performing FTSE stocks in percentage terms, while rival gold miner Randgold also rose 1.4 per cent.
Those gold miners were boosted by an advance in the price of gold following the Fed statement. The Fed’s cautious tone pushed down the prices of the US dollar on currency markets, which in turn boosted the comparative appeal of gold.
However, clothing retailer Next fell 5.4 per cent after the company’s cautious outlook took the shine off a 12.5 per cent rise in annual profits. The stock had hit a record high on Wednesday.
BESI Research analysts kept a “sell’’ rating on Next but others remained upbeat on Next’s prospects.
“A history of innovation, coupled with a strong macro environment, means Next remains a robust stock for investors,’’ said Ketan Patel, senior analyst at Ecclesiastical Investment Management, which owns Next shares.