LONDON MARKET CLOSE: Stocks Higher As Investors Look For US Rate Cut

(Alliance News) - Stocks in London ended higher on Friday as dovish remarks from a key Federal Reserve official boosted investor sentiment.Central banks should move quickly to address economic pain when interest rates are already low, a senior Federal Reserve official said. Wall Street took the remarks by John Williams - the influential vice chairman of Federal Reserve's monetary policy committee - as another sign the Fed is prepared to cut the benchmark lending rate later this month as insurance against an economic slowdown. Williams cited studies suggesting that when monetary policy is already easy, central banks should "move more quickly than you otherwise might" rather than waiting "for disaster to unfold." When rates are higher, authorities "can afford to move slowly and take a 'wait and see' approach," he said in a speech to a meeting of economic researchers. "When you only have so much stimulus at your disposal, it pays to act quickly to lower rates at the first sign of economic distress," said Williams, who is president of the New York Federal Reserve Bank.The FTSE 100 index closed 15.61 points higher, or 0.2%, at 7,508.70, ending the week flat. The FTSE 250 index closed 86.53 points higher, or 0.4%, at 19,621.66, ending the week up 0.4%. The AIM All-Share finished 3.49 points higher, or 0.4%, at 914.24, ending the week down 0.4%.The Cboe UK 100 index closed up 0.2% at 12,726.05. The Cboe UK 250 ended 0.5% higher at 17,510.77. The Cboe UK Small Companies ended down 0.7% at 11,044.52.In mainland Europe, the CAC 40 index in Paris closed down 0.1% and DAX 30 in Frankfurt closed up 0.2%. Analysts at Capital Economics said: "After a difficult start to the week, stock markets around the world have risen since FOMC members Richard Clarida and John Williams both made the case for cutting rates before waiting for more evidence of weakness in the economic data. In the same vein, the central banks of South Korea, South Africa and Indonesia all cut rates in mid-week, with policymakers in Korea in particular sounding very dovish."Expectations for monetary policy have clearly been key to the strength of equity markets, not just this week but throughout 2019. Trailing earnings have actually fallen slightly, but investors are counting on them picking up quickly in the near future, assuming that central bank support will shore up the global economy soon. They are also discounting those future earnings at a lower rate, reflecting the decline in risk-free rates."Stocks in New York were higher at the London equities close, as market expectations for a rate cut grow. The DJIA was up 0.3%, the S&P 500 index up 0.1% and the Nasdaq Composite up 0.2%.In US corporate news, BlackRock reported a sharp rise in assets under management as the investment manager also saw strong net inflows.At June 30, BlackRock's assets under management stood at USD6.84 trillion, which is 36% ahead of the USD6.52 trillion seen at March 31. BlackRock's assets at June 30 are 40% higher than the USD6.30 trillion reported at the same point the year before.BlackRock generated USD151 billion of total net inflows in the second quarter, which represents a record 9% annualized organic asset growth. The stock was up 0.9% in New York.Back in London, the FTSE 100 miners ended among the risers amid higher copper prices and risk-on sentiment, with Antofagasta ending up 3.9%, Anglo American 2.3% higher, Rio Tinto up 1.5% and BHP 1.6% higher. At the other end of the large cap index, advertising firm WPP ended the worst performer, down 2.2% - suffering a negative read-across from French peer Publicis Groupe.Publicis late Thursday warned that traditional marketing trends were declining and this would have a detrimental effect on its key US business, as the company reported second-quarter earnings. "Our progress has been slowed down by the ongoing fee reduction on traditional advertising that continued to impact our overall US operations by around 300 basis points in the quarter," Chief Executive Officer Arthur Sadoun said.Publicis shares closed down 6.3% in Paris.DS Smith ended down 1.7% after the UK Competition & Markets Authority said customers could get a worse deal if flexible packaging solutions firm Liqui-Box completes its acquisition of DS Smith's plastic division. The initial phase of the regulator's investigation found the acquisition would create "insufficient competition" given Liqui-Box and DS Smith's are only two of four companies offering specialist Bag-in-Box packaging to food and drink suppliers in the UK. In the FTSE 250, Acacia Mining ended the standout performer, up 19% at 222.60 pence after the gold miner agreed to be taken over by parent company Barrick Gold. Acacia has agreed a deal with Canada's Barrick, which already owns 64% of its shares, which will see Barrick pay 0.168 of its own shares per Barrick share, equivalent to a value of 232 pence per Acacia share. The deal values Acacia at GBP951 million in total, though the stake under offer is worth GBP343 million. Barrick first made a move to acquire the rest of Acacia in late May, after the government of Tanzania said it would not enter any discussions with Acacia over its problems in the country. Barrick has been leading the talks on Acacia's behalf.Acacia will not be the first London gold miner to be gobbled up by Barrick. In late 2018, then-FTSE 100 gold miner Randgold Resources merged with Barrick, creating the world's largest gold miner. This resulted in Mexico's Fresnillo being the only pure gold miner in the large cap index in London.Aston Martin Lagonda closed up 3.5% at 996.67p after the company's largest investor offered to buy another 3% stake in the luxury sports car maker.Strategic European is to buy 6.8 million Aston Martin shares at GBP10.00 each, for approximately GBP68.4 million. This will take the combined stake of Investindustrial Advisors' funds to 34%. Strategic European Investment Group was set up last December, and is a subsidiary of Investindustrial VI, a fund managed by Investindustrial Advisors.At the other end of the midcaps, Close Brothers ended among the worst performers, down 3.5% after the merchant bank said it continued to deliver a solid performance amid mixed trading conditions. The firm said its banking division's loan book grew during the first 11 months of financial 2019, as the company saw a "solid" performance despite mixed trading conditions. The financial services company said the loan book reached GBP7.6 billion as at June 30, up from GBP7.3 billion at the end of the first 11 months of the last financial year. The firm said the commercial and retail sectors have both grown with its property division remaining flat.The pound was quoted at USD1.2507 at the London equities close, up from USD1.2487 at the equities close Thursday. Sterling is set to see volatility next week, ahead of Boris Johnson's impending coronation as Conservative Party leader. Voting opened up to the Conservative Party's 160,000 members, who will choose the winner between frontrunner Johnson and Foreign Secretary Jeremy Hunt. The final deadline for party members to vote is on Sunday, with the result set to be announced on Tuesday. Theresa May will speak at Prime Minister's Questions in the Commons for the last time on Wednesday, before heading to Buckingham Palace to resign as prime minister to the Queen."Next week is almost certain to see Boris Johnson ascend to the premiership, promising more upheaval for the UK and EU. Signs point to increased instability if the new government attempts to push for a no deal outcome, suggesting that the Johnson government could be the shortest administration in recent memory, as this could spark a full-blown rebellion among soft-leave and Remainer Conservatives," IG Group's Chris Beauchamp said. The euro stood at USD1.1225 at the European equities close, flat against USD1.1224 late Thursday. Brent oil was quoted at USD62.32 a barrel at the London equities close, up from USD61.73 at the close Thursday, amid tensions between the US and Iran."Oil is slightly higher on the back of political tensions in relation to Iran. The US military downed a drone in the strait of Hormuz, and there have been some reports the US downed one of its own drones. Nonetheless, tensions in the region are high, and that is likely to act as a floor for the energy market," CMC Markets analyst David Madden noted. Iran's deputy foreign minister rejected US President Donald Trump's claim that the US shot down an Iranian drone over the Strait of Hormuz, suggesting the US military had mistakenly downed one of its own unmanned aircraft.Seyed Abbas Araghchi was responding to Trump's claim the day before that the US "destroyed" an Iranian drone as it came within some 900 metres of the USS Boxer.Trump described the downing as a "defensive action" after the Iranians failed to heed multiple warnings to stand down.However, a spokesman for the Iranian armed forces said all the country's drones were accounted for. The incident is the latest flare-up in the Strait of Hormuz, a narrow waterway that passes between Iran and the Arabian Peninsula, and serves as a shipping route for a fifth of global crude oil exports.The Iranians started pushing back on the military front after Trump pulled the US out of the Iran nuclear deal with world powers last year and imposed economic sanctions on Tehran.Gold was quoted at USD1,429.80 an ounce at the London equities close, up from USD1,426.40 late Thursday. The precious metal hit a high of USD1,452.49 overnight - its highest level in six years.Commenting on the commodity's appreciation, analysts at FXPro said: "Gold benefits from a combination of two factors: lower interest rates in debt markets and continuing hopes that the global economy will maintain a healthy growth."The current situation resembles the dynamics from 12 years ago, when the Fed reduced the rate and supported the banks, despite the generally healthy economic situation. Back then, the softening of monetary policy led to gold strengthening by more than 60% over the next eight months. The repetition of such a scenario could push the gold quotes in the next six months to new historical highs above USD2,000."The economic events calendar on Monday has UK CBI Industrial Trends Survey at 1100 BST. The UK corporate calendar on Monday has interim results from recruiter SThree and events and publishing firm Ascential. There is also a trading statement from fund management services provider JTC. London Close is available to subscribers as an email newsletter. Contact info@alliancenews.com