London close: Stocks rally after Bernanke comments on QE

17th Jul 2013 16:58

Markets rallied on Wednesday afternoon following comments from Federal Reserve Chairman Ben Bernanke who said that quantitative easing (QE) is 'by no means on a pre-set course' and still depends on how the economic recovery plays out."For markets, that's good news as the US economic recovery, though in train, remains fragile and housing starts data [down 10% on the month] reasserted that to investors," said Market Strategist Ishaq Siddiqi from ETX Capital.Siddiqi said that given the recent "choppy" economic data from the States, markets "are taking this as a sign that progress is set to be made for the US economy to be out of the woods".After an early slump, the FTSE 100 rose strongly to close 16 points higher at 6,572, well off its intraday low of 6,517 reached this morning.Stocks had dropped early on after minutes from this month's Monetary Policy Committee meeting showed a surprise unanimous vote to leave the Bank of England's bond-buying programme unchanged; economists had largely expected at least three policymakers to vote in favour of ramping up the programme.Bernanke in focusIn his semi-annual testimony to Congress today, Bernanke reiterated that the central bank still expects to begin tapering QE later this year (with a view to end the programme in mid-2014) but he said nothing was predetermined and the plan may change if the economic outlook turned for the worse."Our asset purchases depend on economic and financial developments, but they are by no means on a pre-set course," he said.Paul Dales, Senior US Economist at Capital Economics said: "Even though Fed Chairman Ben Bernanke just repeated the party line in a slightly different way [...] the message that the tapering of QE3 is not set in stone and that the end of the asset purchases won't be immediately followed by higher interest rates is increasingly getting through to the markets."Dales said that this message was strengthened by Bernanke highlighting some of the downside risks to the economic outlook, such as the recent increases in mortgage rates and the possibility of a weaker-than-expected global economy.Bernanke will on Thursday testify in front of the Senate Banking Committee.FTSE 100: BHP gains as production rises; miners surgeBHP Billiton, the largest resources company in the world, pleased the market with its output report for the year ended June 30th, saying that it saw a strong period of production with its two major assets - Western Australia Iron Ore and Escondida - exceeding guidance. Meanwhile, annual records were achieved across seven operations and five commodity classes.Rising commodity prices and increased risk appetite were boosting stocks across the wider sector with Fresnillo, Glencore Xstrata, Anglo American, Vedanta and Rio Tinto also performing well. The latter was extending gains made yesterday after reporting record iron ore production in its first half.Engineering company Smiths Group fell sharply after saying that full-year headline operating profit will likely to be £15m below current expectations, reflecting contractual issues in its Detection unit.Chemicals group Johnson Matthey and consumer products firm Unilever were hit by ratings cuts from Credit Suisse, to 'neutral' and 'underperform', respectively. Meanwhile, chemicals business Croda was lower after Barclays Capital lowered its rating to 'underweight'.Imperial Tobacco was also among the worst performers after going ex-dividend, meaning that from today new investors will not be able to get their hands of the company's latest payout.Real estate firm Land Securities was also lower after saying that the retail market remained "challenging" in the first quarter, while conditions across London remained strong.FTSE 250: Hochschild Mining jumps after Q2 update, broker upgradePrecious metals group Hochschild Mining was a high riser after saying it remains on track to hit its full-year production targets. The company also said that its "cashflow optimisation programme" had been extended to deliver further material cost savings, the impact of which will begin to be seen in the second half. The stock was also given a lift by Westhouse Securities which upgraded its rating from 'sell' to 'neutral'.Heading the other way was UK multi-utility supplier Telecom Plus which went ex-dividend. The stock fell despite the company releasing a first-quarter statement which said that organic growth was comfortably ahead of levels seen last year.FTSE 100 - RisersMarks & Spencer Group (MKS) 473.60p +2.84%Glencore Xstrata (GLEN) 271.95p +2.80%Fresnillo (FRES) 1,042.00p +2.56%Anglo American (AAL) 1,357.00p +2.49%Old Mutual (OML) 199.00p +2.16%BHP Billiton (BLT) 1,868.00p +1.97%Smith & Nephew (SN.) 788.00p +1.94%Vedanta Resources (VED) 1,122.00p +1.91%Tesco (TSCO) 362.25p +1.90%Lloyds Banking Group (LLOY) 70.00p +1.82%FTSE 100 - FallersLand Securities Group (LAND) 945.00p -2.53%Imperial Tobacco Group (IMT) 2,197.00p -2.49%Capita (CPI) 1,036.00p -1.80%Johnson Matthey (JMAT) 2,757.00p -1.75%Unilever (ULVR) 2,756.00p -1.64%British Land Co (BLND) 605.00p -1.55%Aberdeen Asset Management (ADN) 398.20p -1.41%BT Group (BT.A) 334.00p -1.30%ITV (ITV) 154.60p -1.15%Admiral Group (ADM) 1,375.00p -1.08%FTSE 250 - RisersHochschild Mining (HOC) 146.20p +7.42%Salamander Energy (SMDR) 135.90p +6.59%Evraz (EVR) 102.10p +5.42%Supergroup (SGP) 1,000.00p +5.26%Dialight (DIA) 1,082.00p +5.05%Essar Energy (ESSR) 131.80p +3.78%Polymetal International (POLY) 571.50p +3.44%Kenmare Resources (KMR) 25.10p +3.08%Keller Group (KLR) 1,130.00p +3.01%Oxford Instruments (OXIG) 1,379.00p +2.91%FTSE 250 - FallersTelecom Plus (TEP) 1,302.00p -6.33%esure Group (ESUR) 312.50p -4.73%Imagination Technologies Group (IMG) 283.00p -2.51%Ted Baker (TED) 1,827.00p -2.04%Bank of Georgia Holdings (BGEO) 1,780.00p -1.93%Menzies(John) (MNZS) 724.00p -1.83%BH Global Ltd. USD Shares (BHGU) 11.65 -1.77%Unite Group (UTG) 379.50p -1.68%RPS Group (RPS) 214.50p -1.61%Crest Nicholson Holdings (CRST) 338.90p -1.60%BC