Wall Street scales to yet more record highs after Powell signals Fed will taper stimulus this year

US markets were propelled to yet more record highs today after the chair of the US Federal Reserve indicated the central bank may start to wind down stimulus measures this year.

The S&P 500 touched a record high today, before paring back slightly to rise 0.90 per cent to 4,510.49 points during early afternoon trading.

Meanwhile, the Dow Jones climbed 0.72 per cent to hit 35,467.26 points, and the tech-heavy Nasdaq soared 1.26 per cent to 15,133.51 points, also a record high.

Jerome Powell said the US economy has reached a point where it no longer needs the same scale of monetary policy support, but reiterated that interest rate hikes are a long way off at his keynote speech at the Jackson Hole economic symposium today. However, he did not provide a concrete timeline for scaling back support.

Andrew Boyle, CEO of LGB & Co, said: “The US equity market indices continued their rising trend of the last week in response to Powell’s presentation as he confirmed market expectations for a policy statement on the tapering of bond purchases in November and implementation in December.”

“His message that tapering is not tightening gave market participants additional hope that tapering would have less impact on monetary conditions than some have feared.”

Yields on 10-year Treasuries edged down to 1.316 per cent today.

FTSE 100 heads into Bank Holiday in the green, mid-cap index reaches another record high

A good day on London’s FTSE 100 helped to lift the blue-chip index into positive territory for the week.

The capital’s premier index added 0.32 per cent to close at 7,148.01 points today, putting the FTSE into the green for the week.

Friday’s gains were led by a rally among industrials stocks, with the likes of BP, BHP and Anglo American all ranking highly on the table of risers.

The mid-cap FTSE 250 climbed to another record high today, closing up 0.45 per cent at 24,059.72 points.

Danni Hewson, financial analyst at AJ Bell, said: “The resources sector provided some support to the UK’s flagship index as mining stocks followed commodity prices higher on a quiet day for corporate news ahead of the August Bank Holiday.”

Powell’s comments engineered late afternoon gains on the blue-chip index, Michael Hewson, chief market analyst at CMC Markets UK thinks.

“The clear delineation between the Fed’s inflation mandate and its employment mandate, has reassured markers.”

“Additionally, the reinforcement of the message that tapering is not tightening, and merely a reflection of the improvement in the economy has helped reassure markets that the central bank is not going to be hasty in removing accommodation.”

The pound gained ground on the greenback, strengthening 0.54 per cent to buy $1.3773.

Winners and losers

Miners made up the risers column, with Anglo American the best performer, up 3.01 per cent to 3,084p.

Chilean miner Antofagasta came second, climbing 2.42 per cent to 1,462p.

Retailers suffered heavy losses today, tempering gains on the flagship index. Sainsbury’s lost 2.94 per cent to plunge to 310.40p after reports it could be the subject of a takeover bid by Apollo receded, while middle class favourite Ocado dipped 1.40 per cent to 2,038p.

Meanwhile, on the mid-cap index, biotherapeutics firm Puretech Healthcare led the FTSE 250 higher, soaring 7.48 per cent to reach 352p. Greetings card business Moonpig was the worst performer, down 2.84 per cent to 389.60p.

Around the world

Asian shares were mixed in overnight trading, with Japan’s Nikkei down 0.36 per cent to 27,641.14 points, while China’s CSI 300 closed up 0.53 per cent at 4,827.04 points.

London’s strong performance was extended into the continent – the pan-European Stoxx 600 closed higher at 472.28 points and the Dax 30 added 0.37 per cent to reach 15,851.75 points.