Footsie soars through 6100 barrier
The FTSE 100 Index touched its highest level for more than five years today amid signs that interest rates in the United States may be near their peak.
The Footsie briefly broke through the 6100 barrier for the first time since February 2001 following massive gains on Wall Street which saw the Dow Jones Industrial Average climb 195 points.
The surge in London and New York was mirrored around the world as global markets welcomed a hint from the United States Federal Reserve that its policy of raising interest rates could be approaching an end.
The rise came despite the cost of oil hitting fresh highs triggered by growing nervousness over Iran’s nuclear programme.
Light, sweet crude closed at 71.35 US dollars a barrel in New York and Brent crude settled at a record price of 72.51 US dollars a barrel in London.
The Fed has raised rates 15 times since June 2004 to 4.75% but minutes from the Federal Open Market Committee’s March meeting showed most of the panel’s members “thought that the end of the tightening process was likely to be near”.
It was just what the interest-rate weary US markets wanted to hear with investors eager to know which way new Fed chairman Ben Bernanke was heading, having taken over from Alan Greenspan.
Many analysts now believe the cost of borrowing in the US will peak at 5%.
David Buik, of Cantor Index, said: “Once the minutes of the Fed were circulated, US equity markets took hold of the bit and the market found it hard to hold on to its head.”
The gains sent global markets soaring with the FTSE 250 Index following the Footsie’s lead as it moved back towards 9900.
