WEEKEND WEB: November stars with a shares bang

Scott Woods
Scott Woods
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SCOTT WOODS with our weekly global finance column, MONEY MATTERS

Many stock markets hit record highs in midweek before easing back. The positive sentiment was fuelled by an economic expansion that seems well-distributed globally, with strong company earnings and pro-growth policies in many countries such as Japan and India.

In addition, there is the hope of tax cuts in the US, led by the prospect of a continuation of a “light touch policy” at the US Federal Reserve.

The growth hopes spurred industrial commodities such as copper, while Brent crude oil settled at around US$61 per barrel. At the same time, the pound fell and UK gilts rose as the nation’s historic rate rise came cotton-wrapped in dovish statements.

So much time has passed since the Bank of England (BoE) last raised interest rates so one could be forgiven for wondering whether the central bank had forgotten how to do so.

Yet the BoE did exactly this, lifting the bank rate from 0.25 per cent to 0.5 per cent.

The last time it increased borrowing costs across the economy, Tony Blair had just stepped down as Prime Minister. 
On Thursday, the Bank indicated that it would not make a habit of it over the coming years, sending the pound down against the US dollar.

Profits announcements from BP and Royal Dutch Shell made a slick impression on investors last week as higher oil prices and further cost cuts finally herald a recovery in big, multinational oil companies on a global scale, leading to much better than expected numbers.

Royal Dutch Shell’s profit improvements were particularly impressive, helped by cost savings following its purchase of BG Group which was completed last year.

Meanwhile, shares in BP which, as a sign of confidence, announced a share buyback based on its results, jetted four per cent higher, the same as Royal Dutch B shares, both in US dollar terms. (Source of information Old Mutual Global Investors (OMGI).

• Please note that the value of investments and the income they produce can fall as well as rise so you may get back less than you invested.