FTSE 100 at new record close for second day after US rate rise

(c) Sky News 2017: <a href="http://news.sky.com/story/ftse-100-treads-water-after-record-close-on-thursday-10804433">FTSE 100 at new record close for second day after US rate rise</a>
 

The FTSE 100 has closed at a new high for the second day running, on the back of Wednesday's US interest rate rise.

London's leading share index had little direction after an early fall of 0.2%, with some profits being taken after Thursday's record close .

But values grew late morning, with the market registering a new intraday high at lunchtime of 7447 points. It closed Friday's session 9 points up at 7424.

Risers were mixed in terms of business sector and led by Admiral, the insurer.

Traders said there was little to drag sentiment down - given it was a quiet day for corporate or economic developments.

The FTSE 100 is 20% higher over the past year - with much of that gain attributable to sterling's weakness since the Brexit vote.

That is because many of its constituent companies make much of their money in dollars, which adds to earnings when that cash is converted to pounds.

President Trump's promise of tax cuts and infrastructure spending have also boosted the values of companies primed to take advantage of the promised US policy.

The FTSE achieved its record milestone on Thursday after the US Federal Reserve hiked interest rates while signalling there was no need to quicken the pace of the increases over the rest of the year.

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.

After the announcement on Wednesday night, 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 (LSE: AAL.L - news) , Fresnillo (Frankfurt: A0MVZE - news) , Glencore (Frankfurt: 8GC.F - news) and Antofagasta (Other OTC: ANFGF - news) , pulling the index higher during Thursday trading.

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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