Markets keep the Carney glow after US employers hire more staff

Shares held on to most of their Mark Carney-inspired gains yesterday, despite surprisingly strong job figures from the US sparking fears the Federal Reserve would cut its quantitative easing (QE) programme.

The FTSE 100 surged more than 3 per cent on Thursday after the Bank of England Governor’s first Monetary Policy Committee meeting resulted in clear guidance that interest rates would stay low for years. Yesterday, the Footsie held at 6,375.52, down just 46.15 points. It is now up nearly 9 per cent since the start of the year.

Employers in the US hired 195,000 more workers last month, although the rate of unemployment stayed at 7.6 per cent, official data showed. In addition, 70,000 more people were employed in April and May than had been previously thought.

Two weeks ago, the US Fed chairman, Ben Bernanke, said the central bank expected to cut back on its $85bn (£57bn) a month QE bond-buying programme later this year. Ever since that statement, investors have been caught in a two-way pull whenever surprising data emerges on the US economy. If it is too good, shares fall due to expectations the Fed will start to trim QE, if it is too bad, shares rise for the opposite reason.

Chris Williamson, analyst at research group Markit, said: ”A tapering of the Fed’s massive quantitative-easing programme is looking increasingly likely to start in the next few months after much better than expected job creation in the second quarter.”

Most analysts predict that the Fed will start the tapering of QE in September.