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The Fed’s current monetary policy is very expansionary, with low interest rates and a stimulus package of $85 billion per month. Traders are currently bullish on equities as they believe the Fed will keep its policy the same, partially because last month US unemployment ticked up to 7.6%.
Overnight, the Reserve Bank of Australia kept interest rates at their record low of 2.75%, adding that there would be room for further rates cuts. This boosted confidence as cheaper borrowing costs encourage economic activity.
In corporate news, Whitbread announced a 3.1% rise in first-quarter like-for-like sales, with group revenue helped by the cold weather as consumers flocked to taste Costa Coffee’s hot drinks. The share price is up 2.8% so far today.
Temporary power supplier Aggreko is down 1.7% this morning despite saying it's on track to meet full-year expectations.
Meanwhile, HSBC’s upgrade by Citigroup not only lifted the share price of the bank but the sector as a whole.