Markets

Stocks surge as Fed cuts interest rate after G7 virus pledge

stock exchange

Shares staged a second day of recovery after the US Federal Reserve cut its benchmark interest rate in a bid to shore up the its economy from the effects of coronavirus.

Shares in the FTSE 100 index traded about 180 points higher in mid-afternoon before closing 0.95% or 63.1 points higher at 6718.20.

In a statement, the Fed said it was a unanimous decision to cut rates by a half percentage point to a target range of 1% to 1.25%.

US stock also rose strongly on the announcement which came after G7 finance leaders and central banks announced that they are “ready to take action” to protect economies from the spread of the virus.

The Dow Jones Industrial Average was up or 1.20%, the S&P 500 1.24% and the Nasdaq Composite by 1.12%.

In a statement, the G7 said that it wanted to “reaffirm our commitment to use all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks.

“Alongside strengthening efforts to expand health services, G7 finance ministers are ready to take actions, including fiscal measures where appropriate, to aid in the response to the virus and support the economy during this phase.

“G7 central banks will continue to fulfil their mandates, thus supporting price stability and economic growth while maintaining the resilience of the financial system.

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