Thoughts of tapering have been banished to the outer darkness this morning, as Fed chairman Ben Bernanke seemed to come down firmly on the side of additional stimulus in his speech last night. The Fed minutes provided little in the way of excitement, but markets were glad to see the chairman nail his colours to the mast in such an emphatic fashion. This seems to set the stage for a push back to, and possibly beyond, recent highs for stock markets, although a few days of rest would do no harm.
Precious metals miners are ascending in London this morning, after gold and silver rallied impressively in the wake of Mr Bernanke’s speech. African Barrick Gold and Fresnillo led the sector, up 11% and 10% respectively, with the latter bouncing off a low not seen for over three years.
Associated British Foods (ABF) reported yet another good quarter, as low-price clothier Primark saw British shoppers return to its stores in droves, helping to offset a dreary winter season. Up 24% for the year so far, there looks to be more good news in store for ABF shareholders.
US markets have recovered their form in an impressive fashion, but traders should be looking beyond Mr Bernanke’s comments and instead examining the actual division of voting at the Federal Open Market Committee. The gradation between ‘several’ and ‘some’ members is quite fine, but with a change in membership in January we could easily see the hawks take control, leading to a sudden and possibly highly-disruptive move in monetary policy. For now, however, with Mr Bernanke still in charge, most traders can rest easy that the Fed remains committed to its loose approach.
Ahead of the open, we expect the Dow Jones to start 160 points higher at 15,450.