FTSE 100 watch: Footsie rallies as Bank of England trims rate

on Aug 4, 2016
Updated: Mar 11, 2020

The UK benchmark index has jumped in early afternoon trade, as the Bank of England (BOE) cut its main rate and said that it would expand its bond purchase programme to prop up Britain’s economy following the country’s vote to leave the European Union. In individual movers, Hikma Pharmaceuticals (LON:HIK) has fallen to the bottom of the FTSE 100 leaderboard after warning on its full-year core operating profit from its generics unit.

As of 12:16 BST, the FTSE 100 had gained 91.51 points to stand 1.38 percent higher at 6,725.91, having traded marginally lower earlier in the session. The index has spiked after the BOE cut the bank rate by 25 basis points to 0.25 percent, in line with expectations. The bank further launched a new funding scheme to ensure that banks keep lending even after the rate cut, as well as a scheme to buy £10 billion of high-grade corporate bonds, and expanded its asset purchase scheme for UK government bonds of £60 billion.

“Following the United Kingdom’s vote to leave the European Union, the exchange rate has fallen and the outlook for growth in the short to medium term has weakened markedly,” the BOE said in a statement, adding that recent surveys of business activity, confidence and optimism suggested that the UK was “likely to see little growth in GDP in the second half of this year”.
In individual movers, Hikma’s share price has tumbled 12.48 percent to 2,335.00p after the company warned that its full-year core operating profit from its generics unit would be hurt by lower revenue from specific market opportunities and the required divestment of certain legacy products.
At the other end of the spectrum has been Aviva (LON:AV), whose shares have jumped 6.70 percent to 410.80p after the blue-chip insurer posted better-than-expected profits for the first six months of the year and lifted its dividend by 10 percent.
**The FTSE 100 was 1.49 percent up at 6,733.02 points as of 12:35 BST on Thursday, August 4, 2016.**