FTSE 100 rose to two-month high after China cut rates
The UK FTSE 100 Index rose to a two-month high on Friday after China completed another round of interest rates cuts.
The FTSE 100 climbed 1.06 percent to close at 6,444.08, driven by gains in mining companies that have been hit by the Chinese economic slowdown – China is the biggest consumer of metals.
The People’s Bank of China cut the one-year deposit rate down to 1.5% and the one-year lending rate down to 4.35%.
Anglo American and BHP Billiton both finished 2% higher while Glencore PLC shares gained 1.8%.
Other notable gains in the sector include Antofagasta’s 3.2 percent jump and the 3.3 percent rise in Rio Tinto shares.
The FTSE 100 also posted gains yesterday after Mario Draghi, the European Central Bank President, said that the bank may begin the quantitative easing programme in December.
Jonathan Roy, advisory investment manager at Charles Hanover Investments, is quoted as saying by Reuters: “Any stimulus by the Chinese is met by some positivity in equities. It’s just a cherry on the top to Mario Draghi comments yesterday,”
Fawad Razaqzada, technical analyst at Forex.com, said in a note: “First, Super Mario (Draghi) came to the rescue. Now the People’s Bank of China has eased its policy further…This is music to the ears of stock market bulls,”
Alastair McCaig, of IG, commented: “European equities maintained their bullish momentum from yesterday, comforted by further proof that the ECB is sticking with Mario Draghi’s mantra of ‘whatever it takes’.
“Although there might well be some debate as to the direct benefits of a change to already record-low interest rates, this once again proves that under Mario Draghi the ECB is acting rather than just venting rhetoric.”