FTSE Shines As Gold Miners Rise, US Stocks To Open Higher
London (Sept 22) Positive sentiment has travelled across the pond following the decision to keep US interest rates near record lows. A fresh record high for the Nasdaq and one-week high for the Dow Jones translated to a positive start for European stocks.
Commodity-related stocks led the gains on the FTSE 100 after an overnight drop in the US dollar when the Fed decided to hold rates steady. The price of gold eclipsed the last seven trading days in a huge jump higher on Wednesday. The higher value of the commodity they mine saw gold miners including Fresnillo (LON:FRES), Randgold (LON:RRS) and Polymetal (LON:POLYP) rise to the top of the benchmark UK stock index.
The decline in gold in the weeks leading up to the Fed meeting came as investment funds dropped bullish positions at the fast pace since May according to CFTC data. Yesterday’s rise has the hallmark of gold short-sellers getting caught wrong-footed by the Fed. The strength in gold could be short-lived if US economic data improves enough to justify the 60% probability the market is assigning to one rise in US interest rates this year.
The British pound extended its rise above 1.30 to the dollar following the Fed decision as the OECD joined a long list of banks and institutions backtracking on doom-laden forecasts for the UK economy.
Shares of Mitchells & Butlers (LON:MAB) rose after the pub and restaurant group updated with a report of rising sales over the summer thanks to sunny weather. Full-year sales however are still expected to fall, with the group blaming the European football championships for a decline in food sales.
Stocks in the US look set for a higher start as concern of an imminent Fed rate hike falls to the wayside.
Apple (NASDAQ:AAPL) shares may see some recovery from declines yesterday after McLaren has denied it was in talks with the tech giant. Speculation that Apple could use McLaren as a Launchpad for its electric car manufacturing had sent Apple shares lower. Still the rule to never believe something until it has been officially denied might apply here.