European stocks opened on the front foot on Thursday with the FTSE 100 outperforming stock indices on the continent. “Safe hands” in Philip Hammond appointed to oversee the UK economy post-Brexit as well as the very real chance of a Bank of England rate cut are the main factors driving sentiment. Stocks love Brexit because of the expected central bank response.

Britain’s benchmark stock index has reached a fresh 11-month high led by homebuilding shares with investors brushing off warning signs from surveyors that the housing market is in trouble. The broad-based gains which saw every sector in the FTSE 100 higher are being driven by expectations of easier monetary policy. Strong gains in the mining sector, where firms make most of their money in foreign currencies indicates a belief that Sterling will drop following a rate cut.

The British currency has been pricing in a rate cut since the referendum result but has since trimmed some of the losses. Sterling is trading higher on Thursday triggered by a combination of short-covering ahead of the rate decision and relief that the UK is forming a new government quicker than previously thought.

Mr Hammond ruling out an emergency budget in combination with Prime minister May denying chances of a snap election adds another layer of certainty after the Brexit vote. An emergency budget would just have been another reason for companies to delay investment decisions and would add to the impact on confidence from the referendum result.

US stocks look set for a higher open with a triple digit gain in the Dow Jones Industrial Average to take it well into new record territory. Every extra day the major averages can hold above last year’s highs, the more traders will start to believe that the breakout is sustainable.

USA pre-opening levels

S&P 500: 14 points higher at 2,166

Dow Jones: 127 points higher at 18,499

Nasdaq 100: 33 points higher at 4,598

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