While a cut in interest rates had been priced in by the Bank of England, the increase in asset purchases was unexpected and helped push the FTSE index sharply higher.
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British stocks rose 1.7 percent, while the pound declined.
Quincy Krosby, market strategist at Prudential Financial, said investors were playing it safe as they waited for the Labor Department’s July employment report. The report for June was stronger than expected, but that followed shockingly weak job growth in May.
“The market has been surprised before and wants to make sure that they’re prepared in either direction”, she said. “In response, both gilt yields and sterling have fallen, while equity markets have moved higher”.
Five minutes into trade, the Dow Jones Industrial Average was 18,362.70, up less than 0.1 percent. China’s CSI 300 index gained 0.2 per cent, and the Shanghai Composite advanced 0.1 per cent. The BOE cut its benchmark interest rate to a new low of 0.25%, relaunched a government bond-buying program and it expanded it into corporate bonds, and set up new, cheap funding for banks. “Broadbent said he was “pretty confident” that the BoE’s stimulus package would have some effect and that he did not agree that the central bank’s actions reflected panic”.
The pound retreated on Thursday (Aug 4) following aggressive moves by the Bank of England to boost the economy after the British vote to exit the European Union.
USA stocks are hardly budging Thursday morning as the market continues the small moves it’s made in the last few weeks.
These efforts have been criticised in some quarters, including from a former colleague on the Bank’s interest rate-setting Monetary Policy Committee.
Thursday’s initial jobless claims reading showed the number of Americans filing for unemployment benefits unexpectedly rose last week, but still showed a healthy labour market. Elsewhere, the Australian dollar rose 0.4 percent to $0.7657.
Benchmark US crude rose 1.10 dollars (83p), or 2.7%, to 41.93 dollars (£31.99) a barrel in NY after a 3% climb on Wednesday.
OIL: Benchmark U.S. crude rose 12 cents to $40.95 per barrel in NY.
But Mr Carney appeared to rule out the prospect of negative interest rates, saying he was “not a fan”.
Among other precious metals, silver was up 0.1 per cent at $US20.39, while platinum was up 0.1 per cent at $US1,160. Silver fell 3 cents to $20.44 an ounce.
The pound has weakened by about 15 per cent against the Singdollar starting 2016 at S$2.0847.
The pound gained 0.15 percent to 84.76 pence per euro and had looked to be recovering after the Bank of England announced a package of new stimulus measures for Britain’s slowing economy on Thursday, driving sterling to its biggest daily losses in a month.
But Japan’s Nikkei surrendered earlier gains to close flat. The yen fell 0.1 percent to 101.33 per dollar JPY= and the euro EUR= pulled back a similar amount to $1.1138.
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Oil prices rose for a second straight day and USA crude advanced firmly above the $40 a barrel mark on short-covering and after a modest stockpile drop at the delivery hub for US crude futures.
