Heading into the close the FTSE 100 is 90 points higher, as mining stocks reach for the sky.
- Rebound continues across the board
- Mining shorts taken to the cleaners
- BoE happy to sit tight on policy
Last night’s stupendous rally has continued to make its presence felt today, with any attempt to push the market down running into a wall of buying. This has been most evident among London’s mining shares, with a remarkable ‘bear squeeze’ going on. Major names like Anglo American, Rio and BHP are all enjoying rises of 10% or more. After huge declines, the sector has finally decided enough is enough, and is treating short sellers to some of their own medicine. Signs of a pickup in Chinese iron ore demand have begun to encourage bargain hunters within the sector, in the hope this might feed through to other metals as well. Maybe, just maybe, the sector is now the value play that investors were looking for. A weaker dollar finally appears to be the catalyst to drive equity markets higher, and with commodities powering higher it seems the bounce has more in store. The prospect of no rate hikes in 2016 in the US appears to have lifted a weight from markets, with risk firmly back on, even in the teeth of declining economic data.
Mark Carney’s latest appearance on the topic of interest rates has fuelled further market expectations that a cut in UK rates is still a definite possibility. Although the MPC is still apparently convinced of the need to raise rates at some point, the tone of the inflation report clearly indicates the Bank of England is quite happy to hold fire for the time being. Attention now shifts to non-farm payrolls tomorrow, and given how poor US economic data has been this week, it would not be a surprise to see the number come in below the 190,000 forecast.
- Rebound continues across the board
- Mining shorts taken to the cleaners
- BoE happy to sit tight on policy
Last night’s stupendous rally has continued to make its presence felt today, with any attempt to push the market down running into a wall of buying. This has been most evident among London’s mining shares, with a remarkable ‘bear squeeze’ going on. Major names like Anglo American, Rio and BHP are all enjoying rises of 10% or more. After huge declines, the sector has finally decided enough is enough, and is treating short sellers to some of their own medicine. Signs of a pickup in Chinese iron ore demand have begun to encourage bargain hunters within the sector, in the hope this might feed through to other metals as well. Maybe, just maybe, the sector is now the value play that investors were looking for. A weaker dollar finally appears to be the catalyst to drive equity markets higher, and with commodities powering higher it seems the bounce has more in store. The prospect of no rate hikes in 2016 in the US appears to have lifted a weight from markets, with risk firmly back on, even in the teeth of declining economic data.
Mark Carney’s latest appearance on the topic of interest rates has fuelled further market expectations that a cut in UK rates is still a definite possibility. Although the MPC is still apparently convinced of the need to raise rates at some point, the tone of the inflation report clearly indicates the Bank of England is quite happy to hold fire for the time being. Attention now shifts to non-farm payrolls tomorrow, and given how poor US economic data has been this week, it would not be a surprise to see the number come in below the 190,000 forecast.
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