The FTSE 100 surged 0.6 per cent at the open, adding to a 100-point gain yesterday to stand at 6,780 in mid-morning trading. That took the index to a 12-month high, matching levels not seen since the summer calm after last year's general election.
The smaller FTSE 250, which is more domestically focused, also jumped, reaching its highest mark of 2016. In the first hour of trading the index climbed 0.7 per cent to 17,363.
Mark Carney shocked markets yesterday with the announcement of an interest rate cut, £70bn of additional quantitative easing and a new round of cheap loans which could pump £100bn of cash into the economy.
The package was much larger than markets had been expecting and sent the pound tumbling by more the one per cent against the dollar and the euro. The bluechip FTSE 100 index typically benefits from a weaker pound since so much of its companies' revenues come from abroad.
The announcement of a cheap loan package for banks along with a £10bn corporate buying spree also pushed investors into equities in search of yield.
The FTSE 100 sunk by eight per cent in the minutes after the EU referendum, while the FTSE 250 plunged by 14 per cent in two days of extremely volatility trading at the end of June. After an impressive recovery, the FTSE 100 now stands just 320 points shy of its all-time high of 7,103 reached on 27 April 2015.
It wasn't all good news however, with Royal Bank of Scotland (RBS) sinking to the bottom of the pile with a four per cent slide on the back of a £2bn loss. That was despite a £253m boost to its reported income due to the weaker pound.
Other bank stocks were relatively calm this morning, with Barclays matching the wider market, up 0.8 per cent at 150p and Lloyds flat at 52p. HSBC climbed another 1.4 per cent as the weaker pound makes its $2.5bn (£1.9bn) share buy back scheme announced this week even more attractive.