Stock markets across Europe soared amid relief at the defeat of an anti-EU candidate in Dutch elections and as traders reacted to the latest interest rate announcement from the US central bank.
The Federal Reserve accompanied its latest rate rise this week with guidance that it would not tighten policy quite as much as financial markets anticipated this year. That message buoyed share prices, adding to the upbeat mood around the results of parliamentary elections in the Netherlands.
Amsterdam’s stock index jumped to a nine-year high after the Dutch prime minister, Mark Rutte, successfully fought off the challenge of populist Geert Wilders. That victory for the incumbent helped to buoy shares in other European markets as it allayed fears over a tide of nationalist sentiment spreading across European countries, undermining the eurozone project and its economy.
The UK’s main bluechip index, the FTSE 100, clocked up a new all-time high and the main indices in both France and Germany closed at their highest levels since mid-2015. Analysts said investor focus would now turn to forthcoming French presidential elections as well as Brexit negotiations but that the Dutch result had helped sentiment for now.
“A cloud of uncertainty has been blown away overnight,” said Joshua Mahony, market analyst at the online trading company IG. “The loss of Dutch populist Geert Wilders comes as a huge boost to the EU and eurozone, which will now begin to shift its attention to the enactment of Article 50, followed by next month’s French election.”
The latest news from the US Federal Reserve was also a key factor in market moves. The central bank raised borrowing costs in the world’s biggest economy for the second time in three months on Wednesday, taking the base rate from 0.75% to 1%. But it toned down previous guidance on future rise, and that weakened the dollar.
The fall in the US currency helped to power a rally in commodity prices and that boosted the many mining stocks that are in the FTSE 100 index. A weaker dollar makes it cheaper for investors to buy commodities, including metals, that are priced in dollars.
Glencore, Antofagasta and Rio Tinto were among the miners in the top risers as the FTSE 100 closed up 47 points, or 0.6%, at a new high of 7,415.95. Anglo American was the biggest gainer, closing up almost 9%, after the Indian billionaire Anil Agarwal said he was buying a £2bn stake in it.
In the US, however, shares were drifting lower by the time of the London close. The healthcare sector was under particular pressure from proposed changes under Donald Trump’s administration that look set to raise regulatory costs on companies. But shares in the luxury winter jacket retailer Canada Goose were headed higher on their first day of trading. The US-listed shares jumped to $18.40 at one point, well above the initial public offering (IPO) price of $12.78.