FTSE 100 extends rally as investors eye MPC meeting

London’s FTSE 100 continued its rally today as investors mull whether the Bank of England will follow the US Federal Reserve’s example and signal bond buying will taper this year.

The capital’s premier index added 0.50 per cent to reach 7,119.04 points during the first hour of trading.

The blue-chip index has recovered from heavy losses suffered at the beginning of the week driven by jitters over the ramifications on global financial markets if heavily indebted Chinese property developer Evergrande collapses.

Markets are bracing for the Bank of England’s latest decision on interest rates and the direction of its bond buying programme today. 

The general consensus is that the Bank will keep both unchanged, staying more dovish than the US Federal Reserve, which signalled tapering is likely to happen this year if the US economy continues to rebound from the pandemic.

Russ Mould, investment director at AJ Bell, said: “There is unlikely to be any movement from the Fed’s counterparts at the Bank of England later today – despite inflationary pressures creeping up.”

“However, there will be an expectation of some kind of signal on when its own asset purchases will be scaled back and if a UK rate rise could be in prospect next year.”

The FTSE was again led higher by industrial stocks today, with the likes of miners Antofagasta and Glencore both up more than 1.85 per cent, driven by easing fears over a slump in demand for raw materials from China after the likelihood of an Evergrande collapse waned.

The mid-cap FTSE 250 was also in the green this morning, rising 0.53 per cent to 23,90971 points, lifted by cybersecurity firm Darktract soaring 6.11 per cent.

Gains were tempered on London markets by poor performing financials.

The spectre of Evergrande over Asian markets seems to be receding. China’s CSI 300 gained 0.65 per cent and Hong Kong’s Hang Seng rose 1.19 per cent in overnight trading.

London’s strong performance extended in Europe this morning. The Dax 30 and pan-Europe Stoxx 600 climbed 0.99 per cent and 1.08 per cent respectively.