Move on US mortgage giants sends FTSE soaring

The dramatic nationalisation of mortgage giants Fannie Mae and Freddie Mac by the US Government today sent London’s leading shares soaring almost 4%.

Yesterday’s intervention helped soothe market fears over the fate of the duo, which own or guarantee more than $5tn (€3,479bn) worth of mortgages between them.

The pair have lost more than $14bn (€9.7bn) in the last year due to the slumping US housing market but their collapse would cause global turmoil as their bonds are held by major investors worldwide.

The news sent Asian stock markets soaring overnight, with Japan’s benchmark Nikkei 225 up 3.4% and Hong Kong’s Hang Seng showing gains of almost 4%. In London, the FTSE 100 Index opened 3.7% higher.

CMC Markets dealer Matt Buckland said: “The move should take a lot of uncertainty out of the market in one quick move and at the same time stands to offer US consumers a helping hand too.”