FTSE Closes at Record High on Mining Sector and BoE

U.K. stocks ended at a record Thursday, with mining shares invigorated by a pullback in the dollar and a major investment in Anglo American PLC, while the pound surged on a hawkish development on interest rates at the Bank of England.

The FTSE 100 UKX, +0.64% climbed 0.6% to close at 7,415.95, surpassing its previous record closing high of 7,382.90 logged March 1. The index on Wednesday finished up by 0.2%.

The fresh all-time high on Thursday was supported by a jump in the basic-materials and oil-and-gas groups. Those sectors maintain a 20% weighting on the British benchmark, according to FactSet data.

Anglo American PLC AAL, +8.62%  topped the gauge as its shares jumped 8.6%. The surge came after billionaire Anil Agarwal’s family trust, Volcan Investments Ltd., said it would buy a 12% stake in the producer of iron ore, copper and other metals. The purchase makes Volcan the second-biggest investor in Anglo American.

BOE rate call: The FTSE 100 slightly pared gains midday as the pound jumped above $1.23 for the first time since early March. That surge came after the Bank of England voted to hold the benchmark rate at 0.25% by 8-1, with board member Kristen Forbes favoring a rate hike. U.K. inflation looks set to rise above 2% in the “next few months,” the bank said.

“Even with inflation expected to breach the central bank’s 2% target this year and unemployment at its lowest since the 1970s, the bank is keen to keep rates low ahead of Article 50 and two years of uncertain Brexit negotiations,” said Tom Stevenson, investment director for personal investing at Fidelity International, in a note.

via MarketWatch

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza