Janet Yellen is taking a 'patient' stance over interest rates
The FTSE 100 headed higher in early action, in line with advances across Europe as investors responded positively to the US Federal Reserve yesterdaypledging to take a patient stance with interest rate hikes.
In early trading, the FTSE 100 was 35 points or 0.55% ahead at 6,364.
The Fed's new "patient" stance on the timing of a rate hike replaces its previous pledge to keep borrowing costs near zero for a "considerable time". It also raised its assessment of the labour market saying "under-utilisation of labour resources continues to diminish," dropping the word "gradually" used in its previous statement.
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On the inflation front, the Fed says: "The [Fed] committee continues to monitor inflation developments closely". It expects inflation to "rise gradually toward 2%".
However, there were three dissenters to the statement: Minneapolis Fed president Narayana Kocherlakota, Philadelphia Fed president Charles Plosser and Dallas Fed president Richard Fisher.
Jasper Lawler, analyst at CMC Markets says: "The fact there were three dissenters shows that there are still a wide range of views and the use of the word 'patience' demonstrates no sudden overzealousness for a rate-hike just because of the stronger payroll and wage growth in November."
Lawler notes that that the US dollar surged after the Fed statement sending the euro and British pound down towards recently-made multi-year lows and all but undoing a chance of a larger recovery in those currencies.
The Russian rouble remained in sharp focus this morning as President Vladimir Putin held his end of year news conference this morning.The BBC is following the conference and notes Putin assured the country "will be back on its feet within two years".
Growth is inevitable, says Putin, arguing that eventual recovery of the world economy will increase the need for Russia's energy resources. But he cautions the Russian economy still needs to be more diverse. $419bn of reserves will not be wasted, he says.
On the London corporate front AstraZeneca advanced 0.8% to 4n484.5p on regulatory approval of a drug to treat cancer.
Oil stocks mostly continued their rise from yesterday's session. Tullow Oil gained 2.9% to 406.5p, Petrofac put on 4.1% to 728.5p and BP edged ahead 1% to 401.7p.
Elsewhere, Royal Mail was in demand, gaining 2.7% to 402.6p after a government commissioned report found that the company was underpriced to the tune of £180m in its stock-market flotation last year.
The London Stock Exchange gained 1.7% to 2,166 after assuring it made "good progress" over in 2014. The LSE reported that £41bn of equity capital was raised on its markets in the first the 11 months to 30 November, up 53% on the same point last year.
Lloyds Bank was lower following news late yesterday that the government will soon be resuming the sell-off of some of its remaining 24% stake in the bank, potentially raising £3bn.
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Kam is a former deputy editor at Hemscott Invest and online editor, City A.M and he was also previously the Digital Editor at IFA Magazine. Kam is currently a senior journalist at The Global Treasurer and contributes to MoneyWeek. Kam shares expertise on the FTSE 100, investing and global stocks.
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