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London open: Stocks gain after dovish Yellen speech
UK stocks rose on Wednesday as oil prices recovered and the markets assessed dovish remarks from Federal Reserve Chair Janet Yellen.
Yellen on Tuesday said the central bank should proceed with caution on raising interest rates amid looming global risks to the US economy, including low oil prices and a slowdown in China.
Speaking at the Economic Club of New York, she said the Fed will monitor a number of factors in its policy decision such as the pace of global growth, inflation, the strength of the dollar and commodities.
“It seems that the markets interpreted Yellen’s goals as somewhat unrealistic and reacted accordingly,” said Rabobank.
“The odds that the Fed may hike in April fell to virtually zero from already low 6% before her speech.”
Meanwhile, oil prices rebounded from the previous day’s lows. Brent crude increased 1.4% to $39.73 per barrel and West Texas Intermediate rose 1.7% to $38.98 per barrel at 0857 GMT.
Weekly US crude oil inventory data from the Department of Energy at 1630 BST will be closely followed amid concerns about the market.
The US will see the private payrolls report from ADP at 1415 BST. The report comes ahead of the all-important non-farm payrolls on Friday.
On the corporate front, mining stocks reversed declines from the prior day with Anglo American, BHP Billiton and Glencore among the biggest risers.
William Hill was under the cosh after Morgan Stanley downgraded the stock to ‘underweight’ from ‘equalweight’ and cut the target to 290p from 425p following the group’s profit warning last week.
Premier Foods rallied after US spice giant McCormick increased its offer for the company from 60p to 65 per share, valuing the Mr Kipling to Oxo Cubes group at £1.5bn.
