Markets rally on Fed rate cut
Wall Street opened sharply higher and European stocks jumped on Friday afternoon following the surprise decision by the US Federal Reserve to cut the discount rate by 50 basis points to 5.75%.
After a volatile morning, European markets received a lunchtime boost from the surprise decision by the US Federal Reserve to cut the discount rate by 50 basis points to 5.75%.
In London, the FTSE 100 rebounded over 3% following the announcement and was 205 points higher at 6,064 by Friday's close. Elsewhere in Europe, the Frankfurt DAX-30 climbed 108 points to end the day at 7,378 and the Paris CAC-40 closed 98 points higher at 5,363.
On Wall Street, stocks staged their biggest rally in four years. The Dow Jones opened nearly 300 points higher, at 13,127, and there were steep gains on the S&P 500 and Nasdaq.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Dangers to economic growth
The Fed cited the dangers posed to economic growth from deteriorating financial market conditions and tighter credit.
The discount rate which applies to loans to commercial banks from regional Federal Reserve lending facilities is separate from the federal funds rate, which remains at 5.25%.
The move provides a short-term solution to the liquidity crisis currently facing financial institutions and will remain effective, said the bank, until the situation improves.
(Are central banks right to intervene in the markets, or should they stand back and allow a much-needed bloodletting to take place? You can read Bill Bonner's views on the matter in the Latest Issue of MoneyWeek, out today)
Oil and gold up, dollar down
In the commodities markets, the oil price jumped as investor concerns over slowing economic growth subsided. Crude futures were almost 2% higher at $72.33 in New York and Brent spot had risen to $69.54 in London.
Copper also ended its three-day losing streak. Copper for delivery in three months jumped over 4% to $7,020 a tonne on the London metals exchange.
Fellow metals gold and silver were also firmer today as the dollar fell.
Sterling had risen as high as 1.9935 against the dollar and was also up against both the euro and the yen.
1535 GMT, 17/8/07
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
-
Lloyds axes foreign currency fees for Club Lloyds customers
Club Lloyds customers will be able to withdraw their money abroad without incurring any extra fees
By Daniel Hilton
-
How to invest during stagflation
Trump’s tariffs look poised to push the global economy into a period of stagflation. We look at how to ensure your investments can survive a global slowdown.
By Dan McEvoy