Gold miners are driving the FTSE 100 higher today, as gold surges to new all-time highs. Leading the charge were Fresnillo and Endeavour, which gained 5.2% and 5.0%, respectively. In the FTSE 250, Hochschild Mining climbed 2.7%, tracking the continued rally in gold prices.
Gold’s latest surge comes as the dollar weakens in anticipation of a US Federal Reserve interest rate cut next week. A weaker dollar typically supports gold, as the precious metal is priced in the US currency. Moreover, lower interest rates make gold more attractive compared to assets like cash and bonds, whose yields tend to drop when rates decline.
The fresh wave of dollar weakness stems from renewed speculation that the Fed might cut rates by 50 basis points, instead of the 25bps that many were expecting. Former New York Federal Reserve President Bill Dudley voiced support for a 50bps cut, and the Wall Street Journal reported that the central bank is grappling with how much to cut rates, weighing inflation risks against job market conditions.
As of Friday, the CME FedWatch Tool showed a 41% chance of a 50bps cut, up dramatically from 14% the previous day.
Meanwhile, the Bank of England is expected to hold rates steady next week, with the Fed’s decision coming just a day before. The Bank of Japan is also likely to leave its rates unchanged in its upcoming meeting.
New York stocks are expected to open higher as well.
Holding back the FTSE 100 was a 2.0% dip in AstraZeneca shares. The pharmaceutical giant has faced a difficult week following a disappointing drug trial update, and on Friday, Deutsche Bank downgraded the stock to ‘sell’ from ‘neutral,’ lowering its price target to 10,500 pence from 11,000p.
Flutter Entertainment slipped 1.6% after announcing a deal to enter Brazil’s fast-growing gambling market, spending $350 million for a majority stake in NSX Group, which operates the Betnacional brand. However, Entain rose 1.9%.
Vodafone also inched up 0.9%, despite the UK’s competition watchdog warning that a merger with Three could lead to higher prices for “tens of millions of mobile customers.” The UK Competition & Markets Authority said it was open to responses on its findings until October 4, with a final decision expected by December 7.
Balfour Beatty rose 0.6% after securing a £363 million contract with National Grid for the Bramford to Twinstead reinforcement project, under the RIIO-2 framework. CEO Leo Quinn noted this contract highlights the company’s growing momentum in the energy transition and security sector.
On AIM, Volvere surged 4.6% following strong half-year results, with revenue up 16% to £22.2 million and pretax profit jumping to £2.2 million from £441,000. Volvere attributed this success to the robust performance of its subsidiary, Shire Foods.
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