Yahoo Finance World Markets React To US Rates Increase
Asian and European stock markets have shown healthy gains in reaction to the US Federal Reserve's first interest rate increase in almost a decade.
London's FTSE 100 Index posted its third successive day of gains as it recovered from an eight-day losing streak.
It (Other OTC: ITGL - news) closed 41 points, or 0.7%, higher as investors cheered the certainty provided by the decision - and the Fed's signals that it will be cautious about the scale of future increases.
America's central bank increased interest rates by 0.25% on Wednesday after seven years at near zero, as a result of what Fed chair Janet Yellen said was confidence "that the economy will continue to strengthen".
Hong Kong's Hang Seng Index (Other OTC: HGSXF - news) jumped 0.8% overnight while in China, Shanghai's composite index rose 1.8%. Japan's Nikkei jumped 1.6%, South Korea saw gains of 0.4% and Sydney's market was up by 1.5%.
IG Markets analyst Angus Nicholson said: "What is clear is that equity markets are taking the rate hike as a positive.
"The fact that the Fed were able to hike rates indicates that the US economy has finally developed enough upward momentum."
European stock markets also saw gains. Germany's Dax closed 2.6% higher while France's Cac 40 added 1.1%.
The hike saw the US dollar strengthen, with the pound down more than a cent against the greenback at just under $1.49.
US stock markets had risen initially following the decision but in the latest session were weaker amid more falls in US oil prices.
:: Why A US Interest Rate Increase Matters
The decision by the Fed's rate-setting committee on a hike was unanimous. They have taken action because they judge that the US economy is now strong enough to be weaned off the life support of low rates that have sustained the recovery.
But the Fed also indicated that economic conditions were likely to develop in a manner that meant rates would increase only gradually and would remain "for some time below levels that are expected to prevail in the longer run".
The hike will heighten speculation about the timing of a rate rise in the UK, where interest rates have been held at the historic low of 0.5% since 2009.
But Bank of England governor Mark Carney has appeared to play down the prospect that it would follow suit - with Britain seeing near-zero inflation and slowing wage growth.
