Global equity markets rose yesterday, helped by a rally in European shares after the Bank of England cut interest rates and revived a bond-buying programme to cushion a blow to the economy from Britain’s June vote to leave the EU.
The launch of the policy easing measures hammered sterling and weighed on bond yields.
The Bank of England cut its main rate by a quarter percentage point to a record low 0.25 per cent, and said it would take “whatever action is necessary” to achieve stability in the wake of Britain’s vote to leave the EU.
The rate cut was widely expected but not the other measures.
MSCI’s world stocks index, which tracks shares in 45 nations, was up 0.34 per cent.
Sterling was down 1.53 per cent at $1.3120 and on track for its largest one-day fall in a month against the dollar. Wall Street shares were little changed as investors awaited Friday’s US non-farm payrolls report for clues on the timing of the next Federal Reserve interest rate hike.
The number of Americans filing for unemployment benefits unexpectedly rose last week, but the labour market remains healthy and will probably continue to support economic growth for the remainder of this year.
The Dow Jones industrial average fell 2.57 points, or 0.01 per cent, to 18,352.43, the S&P 500 gained 0.96 points, or 0.04 per cent, to 2,164.75 and the Nasdaq Composite added 5.01 points, or 0.1 per cent, to 5,164.75.
Europe’s broad FTSEurofirst 300 index was up 0.69 per cent at 1,331.37. Strength in major financial and industrial stocks such as Aviva and Siemens boosted the region’s equity markets.
Oil prices slipped after gains made earlier in the session and on the previous day as global over-production and unsold crude weighed on markets.
Brent crude was down 0.26 per cent at $42.99 a barrel, while US crude was up 0.24 per cent at $40.93.
In bond markets, the BoE rate cut sent US Treasury yields tumbling with some short- and medium-term yields hitting their lowest levels in more than three weeks. The move pushed yields on 10-year UK government bonds or Gilts to a record low of 0.646 per cent.
Benchmark 10-year US yields hit their lowest level in three days of 1.484 per cent.
The dollar, meanwhile, gained against a basket of currencies for a second straight session, as investors continued to balance positions ahead of today’s jobs report.
The dollar index, which tracks the greenback against six major currencies, was up 0.14 per cent to 95.695.
Gold prices turned higher on the BoE decision but the stronger dollar kept a lid on gains.
Spot gold prices were up 0.42 per cent to $1,363.21 an ounce.