FTSE charges back 1.8% on commodities and earnings; BoE minutes show no increased threat of rate hikes

<p>The FTSE 100 powered back above the 6000 level on Wednesday after traders bought back into commodity stocks having seen the price of metals and […]</p>

The FTSE 100 powered back above the 6000 level on Wednesday after traders bought back into commodity stocks having seen the price of metals and oil gain over 1% and on bullish results from technology bellwether Intel and Yahoo last night.

Last night’s earnings from across the pond have helped increase demand for European equities and convince investors to buy back into the recent debt fear induced price dips. The better than expected first quarter figures from Intel has given a broad lift to most technology stocks within Europe today and with Intel being a bellwether technology stock too, it boosts expectations of wider consumer demand. This has had positive correlations to wider equity markets as well.

Technology wise, many firms have received a lift from Intel’s earnings. Chip maker ARM Holdings is one stock that has traded strongly on much higher investor demand. Shares have charged higher by 4.3% straight to the top of the FTSE 100 leader board. Shares in European technology firms ASML Holding, STMicroelectronics and Infineon have also benefited today and seen gains.

It is also the stronger commodity prices, boosted by the weaker US dollar, which has helped to trigger gains for heavyweight energy and mining firms. Xstrata, despite shares going ex-dividend, BG Group and Antofagasta have all seen healthy gains on the back of copper and crude oil prices rallying some 1.5%.

The price of gold reached another landmark this morning, breaking through the psychologically important $1500 level as demand for the precious metal continued on inflation pressures and debt fears. Today’s weaker dollar has also helped to add a third string to the gold demand bow and considering the consistency of the metals charge higher in prices, it could be a dangerous tactic to trade against this move.

Today’s gains are however by no means a foregone conclusion and we have several key US firms to report after lunch and the close of the European trading session including Apple, American Express and AT&T.

BoE minutes show no increased threat to a rate hike next month
The Bank of England’s minutes from the last policy meeting showed no new fans within the committee for an immediate rate increase. The minutes have boosted hopes that a rate hike is now unlikely to come next month. There remains a 6-3 split in the camp and statements such as ‘an increase in the bank rate in current circumstances could adversely affect consumer confidence’ will give both homeowners and consumers a nice boost as we head into the bank holidays.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.