The FTSE 100 has recorded its biggest weekly rise for nearly four years, buoyed by optimism that central banks would continue to support the struggling global economy.
The leading index recorded its eighth consecutive daily rise as the minutes from the US Federal Reserve’s September meeting released overnight suggested the US central bank was unlikely to raise interest rates this year as many had expected.
Investors had been concerned the Fed was about to end its cheap money policy and an interest rate rise had been widely expected at last month’s meeting. But worries about continuing low inflation and slowing growth in China have stayed the Fed’s hand for the moment. Since the September meeting, a poor set of US employment numbers has added to the general uncertainty about the effect of a slowdown in emerging markets on the rest of the global economy.
Markets shrugged off comments on Friday from the Atlanta Fed president, Dennis Lockhart, that an October or December rate-hike lift-off was “likely appropriate”.
A run of disappointing data from Germany during the week – including falling output and exports – added to the gloom about global growth but prompted speculation the European Central Bank could extend its quantitative easing programme. There was also talk of a new stimulus programme from China.
The FTSE 100 finished at 6416.16 on Friday, up 41.34 points or 0.65% on the day and 4.7% on the week. It was the biggest weekly rise since the 7.5% gain during December 2011 at the height of the eurozone crisis, when a brief burst of optimism that the region’s problems were close to resolution lifted markets, albeit temporarily.
Commodity companies were among the main gainers on Friday, partly on hopes that the Chinese economy would be supported by the central bank and partly by a dip in the dollar – in which metals and oil are priced – as the prospect of a US rate rise faded.
A decision to cut zinc production by the world’s biggest producer, Glencore – up 7% on the day to 129.1p – gave a sharp lift to the metal’s price and gave renewed support to mining shares.
Meanwhile, oil made its best weekly gains for more than six years despite a late dip on Friday, with the conflict in Syria causing a lift in prices, along with forecasts from the US of falling output heading into 2016.
European markets also moved higher, with Germany’s Dax adding more than 1% on Friday and France’s Cac closing 0.5% higher.
On Wall Street, the Dow Jones Industrial Average was up 0.2% by midday, on course for a near 4% rise on the week and back above the 17,000 level.
The surge in the FTSE means the index is at its highest level since 18 August, and has recovered from its a disastrous third quarter, when it recorded its worst three-monthly performance since September 2011 as investors feared a serious slowdown in the Chinese economy.
This article was written by Nick Fletcher, for theguardian.com on Friday 9th October 2015 18.31 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010