Dow Jones hits 12 000 after strong Home Sales data

The FTSE 100 finished up 0.8 percent at the close, led higher by Aggreko after Goldman Sachs initiated coverage on the company with a buy rating, the stock was up over 5 percent on the news. Randgold was amongst some of the biggest losers on the day, dropping 2 percent on weaker bullion prices.

Investors piled back into Sterling today after this morning’s release of Decembers Bank of England minutes. The report surprised markets after it showed that another member of the committee, Martin Weale, had joined Andrew Sentence, in voting for an interest rate hike at the January 13th meeting. The 6-2-1 vote helped the price of sterling recover some of yesterdays GDP led sell off, and stoked fears that the risk to the near term inflation outlook has increased. With the potential for further commodity price rises and the new higher rate of VAT still filtering through, inflation could be set to rise above Decembers 3.7 percent reading.

U.S. New Home Sales released at 15:00 London time showed a jump for December of last year to 300k, analysts had been expecting 280k new homes to have been sold. After initially selling off at the open the Dow Jones Industrial Average rallied on the news, hitting 12,000 for the first time since the summer of 2008.

After the London close investor attention will turn towards tonight’s FOMC meeting, where a vote of no change in rates is widely expected. Investors will also be eyeing the accompanying statement closely for clues on the economy and also any change to the bond buying programme.

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