U.K. stocks finished higher for the first time this week on Wednesday, getting a boost from a weaker pound and a rally for miners.
The FTSE 100
climbed 0.4% to end at 7,313.51, breaking a two-day losing run.
The gain “can be derived from a hawkish Fed Chair Yellen (and colleague Bostic) supporting continued gradual rate hikes (market implied probability of Dec rate hike now 70%),” said analysts at Accendo Markets in a note. Federal Reserve Chairwoman Janet Yellen and Atlanta Fed President Raphael Bostic, nonvoting member of the Fed, both hinted that a further rate hike in 2017 was likely.
“This has firmed the USD to the detriment of [pound] and [euro], but to the benefit of the both benchmarks’ internationals/exporters,” they added.
Sterling
was recently down at $1.3401 from $1.3460 on Tuesday, after trading as low as $1.3364. It has fallen further below the $1.36 level hit earlier in September. The recent rally—when the pound rose to the highest level against the dollar since the Brexit vote in June last year—came after hints from the Bank of England it was preparing to raise interest rates in coming months.
However, the U.S. Fed’s policy update last Wednesday points at a further rate increase in December, based on projection of the policy setter’s outlooks plotted on a chart, known as the dot-plot. That has helped strengthen the dollar against its rivals. On Tuesday, after European markets closed, Yellen said it would be “imprudent” to leave monetary policy on hold until inflation hits the central bank’s target.
Stock movers: Miners were among the biggest advancers in London on Wednesday, rising alongside higher copper prices
Shares of Anglo American PLC
rose 1.2%, Antofagasta PLC
picked up 1.3%, and Rio Tinto PLC
added 0.2%.
Not all metals prices rose, however, as gold
fell 1%, dragging precious-metals miners lower. Shares of Randgold Resources Ltd.
lost 2.3% and Fresnillo PLC
fell 1.6%.
Royal Bank of Scotland Group PLC
was also among the notable gainers, rallying 3.4% after Jefferies analysts hiked their rating to buy from hold. RBS is likely to be the sector’s biggest beneficiary of an expected U.K. interest rate hike, according to Jefferies.
In other sectors, shares of SSE PLC
dropped 1.6%. The losses came after the utilities firm warned on profit due to reduced networks earnings.
Outside the FTSE 100, shares of Carillion PLC
soared 21% after reports a Middle Eastern bidder is preparing a takeover for the construction-projects company.
