Investors took profits on Friday as Wall Street fell on day two after the US Federal Reserve’s decision to hike interest rates, defying expectations for the traditional Santa Claus rally in stocks. The FTSE 100 finished the session lower by 50.12 points or 0.82% to 6,052.42.
Blink and you’ll have missed it, as the US interest hike feel good factor looks to have already evaporated. Historically, this has been the week in December when the benefits of the Santa rally can be enjoyed by equity investors. Uncertainty and indecision created in the run up to Wednesday has seen the boost equity markets would have hoped for turn out as more of a whimper than a bang, and Thursday night’s Chinese ‘Beige Book’ has only sped up this turn around.
London’s equity markets saw healthy gains on Thursday as investors welcomed the Federal Reserve’s first rate hike in nearly a decade, which was accompanied by reassurance from chairwoman Janet Yellen that the tightening path would be gradual.
A jump in copper prices gave shares of miners a shot in the arm despite some downbeat news out of the People´s Republic of China.
Three-month copper futures rose by 2.8% to hit $4,674 per metric tonne on the LME.
According to a private survey from China Beige Book International, national sales revenue, volumes, output, prices, profits, hiring, borrowing, and capital expenditure at the country´s companies were all weaker in the latest quarter .
Meanwhile, after its latest meeting to decide on monetary policy the Bank of Japan kept its base money target under the stimulus programme but set up a new one to buy exchange-traded funds, extend the maturity of bonds it owns and up its purchase of key risky assets.
Markets in Japan briefly rallied on the news, but BoJ governor Haruhiko Kuroda said in the press conference following the announcement that the latest policy changes did not amount to additional easing and were designed to give flexibility to adjust policy.
Gold had a volatile time in the wake of the Fed’s move. The price of gold sank within a whisker of its recent five-year low of $1,045 an ounce on Thursday before rallying $15 on Friday to $1,067 on the back of the softer dollar. This was still $7 lower over the week as a whole.