FTSE 100 reaches new record high on steady increase for US interest rates

John-Paul Ford Rojas, Business Reporter

The FTSE 100 has hit a new all-time high after the US Federal Reserve hiked interest rates but signalled there was no need to quicken the pace of the increases over the rest of the year.

London's leading share index rose 47 points to finish at just below 7416 points, a record close.

It had earlier pushed past the 7400-mark to 7445 to set a new mid-session record, topping the previous high seen earlier this month. Traders were reacting to the Fed's decision on Wednesday.

It was the second US rate rise in three months for the world's biggest economy and only the third since America's central bank slashed rates to near-zero during the financial crisis in 2008.

The Fed's decision was seen as a "goldilocks" move by stock markets - signalling that the US was healthy enough to withstand higher borrowing costs but not tightening them too much.

It lifted rates by a quarter percentage point, to a range of 0.75% to 1% - but stuck to its plan for just two more increases this year.

Fed chair Janet Yellen pointed to improving US growth that meant it was ready to see rates rise towards more normal levels.

But the dollar weakened on the signs that the pace of increases would not accelerate - a trend that helped global commodity companies that sell their goods in the US currency.

That lifted FTSE-listed global mining giants such as Anglo American, Fresnillo, Glencore and Antofagasta, pulling the index higher.

Jonathan Roy, advisory investment manager at Charles Hanover Investments, said: "It is a goldilocks result for the markets.

"The Federal Reserve has given us a dovish hike, that's still fuelling the era of easy monetary policy and the positive impact it's having on stocks.

"You couple that with a favourable outcome from the Dutch elections and throw into the mix a large investment into UK-listed miners… so that's the perfect storm for fresh highs on the FTSE 100."

The Bank of England's latest monetary policy decision dragged the index a little below its highs.

That was because while it left rates on hold at 0.25%, there were signs of a split with one member of the Monetary Policy Committee voting for a rise.

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