The FTSE 100 was up 1.7% to 6211 by late morning on Wednesday, while Germany’s DAX was up 1.8% to 10,066 and France’s CAC 40 up 1.9% to 4450.
The Stoxx Europe 600 reflected the fact that the upbeat sentiment was Europe-wide, rising 1.4% to 341.
In her speech last night at the Economic Club of New York Yellen said readings on the US economy since the turn of the year have been “somewhat mixed”. While an average of 230,000 jobs have been added a month this year so far, manufacturing and net exports have continued to be “hard hit” by slow global growth and the “significant appreciation of the dollar” Yellen said.
Markets interpreted this as a signal that a second rate rise in the United States is some way off still, triggering the positive sentiment in the US yesterday which continued into European markets when they opened again today.
There had been some expectation building of a June rate rise or even one resulting from April’s Federal Reserve meeting, and the speech was widely regarded as pouring cold water on those flames.
“Janet Yellen’s speech has enlivened what threatened to be a dull few days,” said Chris Beauchamp, senior market analyst at IG. “Markets had been looking to mark time until the end of the quarter at least, but Ms Yellen evidently had other plans. Her speech was taken as notably dovish, cancelling out some of the ‘April hike’ calls from the previous week, with the usual reaction of a falling US dollar and surging equities seen yesterday evening.”
