FTSE 100 Sees 6 Month High Thanks to US Federal Reserve

the previous close line of 5820 can be seen near the bottom of the graph
The US Federal Reserve announced that it was pledging $40billion a month into a flagging US economy, until it saw sustained job market growth. The news comes as a great relief to the UK market as it struggles to deal with declining and unstable European financial systems. A growing and strong US market would give the UK a solid economy with which to trade, bolstering confidence in the UK stock market.

As of 11:13am the FTSE100 was at 5910.41, a 90.49 or 1.6% growth. While it ducked a little from an earlier high of 5911.70, where the index hit its strongest posting in 6 months, the growth is incredibly encouraging during a nervous time for most economies. This is a large step towards the FTSE’s aim of hitting 6000 points, a psychological barrier that, once broken, will provide a huge measure of confidence in the UK market and hopefully stimulate the economy even further.

Experts have warned against being too optimistic about the rise, indicating that while it is a positive move for the market, there are chances for people to run too far ahead and see another drastic collapse. Erring on the side of caution seems to be the way forward.

Dag Muller, technical strategist at SEB (Skandinaviska Enskilda Banken/Scandinavian Private Bank) said of the growth, “If you look at the move from the June lows, you can draw some tentative trend channel lines and the upper end of that trend channel coincides fairly well with that yearly high. So ... as long as we don't get any message from the market that it has run too far too fast, I think you should aim at 6,000-plus in this move in the FTSE ... within next week."

A 6000point valuation of the FTSE 100 has not been reached in over a year. The FTSE 250 also saw a boost, with 271.85 rise as of 13:30.