The FTSE was trading slightly higher this morning, after a strong session yesterday was reinforced when the US Federal Reserve continued to hold interest rates low. As of 10am (London time), the FTSE stands at 5640.
The Fed confirmed its plans to keep interest rates in the current 0% - 0.25% range for the long term, while its optimistic assessment of the US economy buoyed hopes of improving global growth. 'The idea is certainly to grease the wheels of the global economy,' said MF Global analyst Mike Fitzpatrick.
The mining sector was one of the leaders in boosting the FTSE during early trading, enjoying a burst of strength from rising commodity prices. Fresnillo, Xstrata, Kazakhmys and Eurasian Natural Resources were all among the FTSE's top performers, gaining 1% - 2.4% in the wake of the Fed's dollar-suppressing interest rate announcement. The weakening effect of low US interest rates on the dollar also provided a lift to the energy sector, as oil prices rose above $82 a barrel. BP, BG Group, Royal Dutch Shell and Cairn Energy all showed growth, while Tullow Oil gained 23p from rumours of a possible oil exploration partnership in the Democratic Republic of Congo.
British Airways was still soaring after yesterday's agreement with unions to resolve their pension deficit problems, adding another +0.65% this morning to Tuesday's +4.5% rise. DIY retailer Kingfisher was another high-flier, gaining 2.2% after HSBC improved the firm's rating from 'overweight' to 'good'.
Banks were also up this morning, with Barclays benefitting from a rating boost from Morgan Stanley, while RBS gained 1.3% following reports that the bank intends to rearrange its balance sheet and refinance around £10 billion of its £28 billion debt.
At the thinner end of the wedge, security services provider G4S has lost 3.19% so far today. Despite reporting a 20% spike in profits, the security company was still suffering the after-effects of yesterday's disappointing prospects for growth.
Drugs developer Shire was down by 2% after a broker downgrade from Citigroup, but its fellow pharmaceuticals were showing similarly gloomy prospects as investors turned their eyes towards more risky stocks. Astrazeneca was down by 0.38%, and Glaxosmithkline fell 0.44%.
Other recipients of a blow from the broker ratings companies were Marks & Spencer, downgraded from 'neutral' to 'underweight' by JP Morgan, and investment manager Man Group, who remain 'equal weight' from Morgan Stanley but saw their target price and earnings outlook slashed. Both companies sank under the weight of these announcements, losing -1.4% and -3.3% respectively.
In employment news, the jobless figures were this morning reported to have fallen 33,000 for the quarter to January, standing at 2.45 million (7.8%). Elsewhere on the economic front, today's MPC minutes revealed that the decision to keep UK interest rates at 0.5% was unanimous. The MPC were also in full agreement to leave the UK's quantitative easing programme unchanged.
Indicators to look out for this afternoon are mostly from the US, with the February PPI due at 12.30 (London time) and the weekly crude oil stocks coming in a little later, at 15.30 (London time).
