Greater London, England -- (SBWire) -- 11/09/2010 -- Giles Watts, Head of Equities, City Index commented:
“Heavy weight banks and miners drove the FTSE to two year highs this morning, as investors cheered the Feds move to pump $600bn into the staggering US economy.
The UK market was up over100 points within an hour into the session breaching 5850 and reaching levels not seen since June 2008.
As if the FED move wasn’t enough to drive sentiment, solid corporate earnings from heavyweights Unilever and Man Group set the tone for a positive morning. Unilever shares rallied 3% after announcing a solid trading update for the 3rd quarter hitting the top end of analyst expectations.
Fund Managers Man Group also impressed the market, trading 8% better after seeing profits drop to $227 in the first half of the year, better than had been expected. Man Group has been much maligned of late, but the first half numbers suggest that this may be unwarranted and the CEO signalled the company’s strength by dismissing takeover rumours.
Corporate updates in Europe also provided cheer, as BNP Paribas surged 3.5% after reporting a 46% increase in third quarter profit. In Switzerland, insurer Swiss RE surged 6% on news that the firm had doubled third quarter profit.
Investors have been on tenterhooks for days awaiting the FED announcement and initial reaction last night seemed muted as the Dow Jones trended and currencies fluctuated in tight ranges. But a more positive mood began to emerge overnight as Asian markets rallied hard. Markets were called up 0.5% in the early session this morning, as higher commodity prices and a weaker dollar were seen as catalyst for miners to drive European indexes higher. Momentum has snowballed and investors have been adding to positions rather than taking profit.
It seems that in the very short term, the market has received QE2 well, but with Jobless data round the corner and the health of the recovery now under even closer scrutiny, any real vindication of the policy could take months to emerge."
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