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Fed rate cut hopes power FTSE 100, buyout spurs Acacia

Stock Markets Jul 19, 2019 09:15
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By Shashwat Awasthi

(Reuters) - London's FTSE 100 posted broad gains on Friday as bolstered hopes of a U.S. interest rate cut fuelled appetite for riskier assets, while mid-cap Acacia Mining soared after agreeing to an increased buyout offer from Barrick Gold.

The blue-chip index (FTSE) added 0.6%, with all sectors trading in the black. The mid-cap FTSE 250 (FTMC) rose 0.4% by 0745 GMT.

Acacia (L:ACAA) surged more than 18% to 220.4 pence and hit its highest level since late February after Barrick (TO:ABX), its largest shareholder, agreed to buy out the remaining shares in the company it does not already own at an implied value of 232 pence a share.

The FTSE tracked overnight gains on Wall Street and in Asian markets, as two top Federal Reserve officials argued the need to quickly stimulate the economy, cementing bets that the Fed will cut rates at its July 30-31 policy meeting.

"While it is looking increasingly certain that the Fed will probably cut rates this month, it is stretching credibility to suggest that they will cut by 50 basis points," CMC Markets analyst Michael Hewson said.

Fuelled in part by lingering hopes of interest rate cuts by central banks, the exporter-heavy FTSE 100 has overcome a slump it suffered in May due to global trade uncertainty, and is on course for its best year since 2016.

The index has also benefited as Brexit risks have pummeled the pound. On Friday, those risks were heightened as a Reuters poll showed eurosceptic Boris Johnson led Jeremy Hunt in the race to be the next Prime Minister.

Sterling, which rallied on Thursday after stronger-than-expected retail sales data and a bid by lawmakers to prevent a no-deal Brexit, was hit as a result, helping exporter stocks such as BAT (L:BATS) advance.

However, the unexpected rebound in retail sales in June did raise hopes that the sector could tide over risks from a Brexit-driven hit to consumer sentiment.

Ocado (L:OCDO) was the biggest gainer on the FTSE 100 with a 3.3% increase, while shares of Just Eat (L:JE) and Sainsbury's (L:SBRY) also rose.

WPP (L:WPP) slid 3% after French rival Publicis (PA:PUBP) cut its annual revenue growth target, as it struggles to revive sluggish sales in the United States amid increasing competition for ad dollars from Facebook (O:FB) and Google (O:GOOGL).

Aston Martin (L:AML), which has lost more than a fifth in value this year, advanced 3.3% after the luxury carmaker's biggest investor offered to buy another 3% stake in the company.

Graphic: Acacia shares gain since Barrick's bid in May, https://tmsnrt.rs/2O5wb3v

Fed rate cut hopes power FTSE 100, buyout spurs Acacia
 

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