Endeavour Mining, Ocado, Entain leads FTSE 100 ahead of BoE

December 14, 2023 02:15 AM PST | By Invezz

Endeavour Mining, Ocado, Entain leads FTSE 100 ahead of BoE — Image source: Invezz

Bank of England decision ahead

The FTSE 100 index comeback was triggered by the relatively dovish Federal Reserve decision. In it, the bank decided to leave interest rates unchanged between 5.25% and 5.50%.

Most importantly, the bank pointed to three rate cuts in 2024. With this confirmation, most analysts now believe that the bank could do more cuts during the year. Jeff Gundlach expects about 200 basis points cuts while ING see it cutting by about 150 bps.

Therefore, economists now see the Bank of England embracing a more dovish tone. The base case is where it leaves rates unchanged and points to a few cuts in 2024. Analysts at Goldman Sachs believe that the BoE will start cutting in August.

The BoE is in a more difficult position than the Fed. For one, inflation remains above 4.7% while in the US, it dropped to 3.1% in November. Most importantly, the country is on the verge of sinking into a recession.

According to the Office of National Statistics (ONS), the British economy contracted by 0.3% in October as manufacturing, services, and construction activity dived. Therefore, additional rate hikes could make a bad situation worse. At the same time, rate cuts could make it difficult for the BoE to fight inflation.

Hopes of a dovish Fed have pushed the FTSE 100 index higher and gilt yields lower. The GBP/USD pair rose slightly to 1.2665.

FTSE index chart

Top movers in the FTSE 100 index

Most FTSE 100 index companies were in the green. Endeavour Mining share price jumped by more than 7% as gold prices surged to $2,051. In a recent note, analysts at Barclays noted that the company was moving to 2024 with healthy tailwinds.

Ashtead Group stock jumped by over 6%, making it the second-best-performing company in the FTSE 100 index. Investors hope that low-interest rates will spur more construction activity in the UK. In all, the stock is still down by about 9% from its highest point this year.

The other top performers in the Footsie were Ocado, Fresnillo, Entain, and Segro, which jumped by more than 5%. Entain’s shares have jumped after the company’s Chief Executive Officer resigned following a 615 million pound bribery settlement. Fresnillo jumped after silver prices jumped.

Watch here: https://www.youtube.com/embed/NXOlEi0PGPM?feature=oembed

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