The FTSE 100 bounces back on Fed comments

Troubles in the Middle East led investors to haven assets. Gold prices added 1%, while. bond yields dropped by 10 bps in the UK. The Hamas attack in Israel - that killed hundreds of people and led to retaliation by the Israeli army – also caused a rise in oil prices, with WTI and Brent gaining 4% in the afternoon. Commodity and defense stocks also advanced. The FTSE 100 ended the session flat.

Treasury yields retreated further yesterday in the US following dovish comments from U.S. Federal Reserve officials, which boosted UK shares this morning. They hinted that rising yields on long-term U.S. Treasury bonds could have the same effect as rate hikes on cooling the economy, raising hopes that the Fed would not continue its restrictive monetary policy for long. The FTSE was up 1.5% at 9.30 am.

Markets now forecast an 88% chance of the Fed keeping rates unchanged at its next meeting in November, according to the CME FedWatch Tool.

Miners rose as copper and gold continued to climb amid ongoing worries about the conflict in the Middle East.

In London, online supermarket Ocado gained 5.5% after new data from Kantar showed that its sales jumped 9.6% year-on-year in the third quarter to GBP 544 million. Kantar also reported that UK grocery price inflation eased to its lowest level in seven months in September.

Things to read today:

The best books to understand the Israeli-Palestinian conflict (Financial Times)

The Fed Whiffed on Inflation in the ’70s. It Doesn’t Want a Repeat (Barron's)