Rich seam for miners from Asian rally
A RALLY in Asia-Pacific markets helped boost European equities yesterday as investors seemed to be betting on an economic recovery and were optimistic about progress towards a coronavirus vaccine.
A spike in infections across the globe, however, kept a lid on gains.
European stock markets were well over 1pc up by the close, with London’s benchmark FTSE 100 climbing 1.33pc to 6,176.19 and Frankfurt’s Dax hot on its tail, rising 1.32pc.
Paul Donovan, of UBS Wealth Management, said: “Equity markets seem relatively unconcerned with the rising number of US Covid-19 cases. Although fear in the US would appear to have increased, the level of fear is nothing like that seen earlier this year.
“National lockdowns remain very unlikely. There is also the possibility that the increase in cases will encourage further fiscal stimulus.”
Miners were among some of the top risers, following a jump in commodity prices, as iron ore, lead, aluminium and zinc rallied during the session.
The price of copper also rallied yesterday, hitting a two-year high in London, after copper miners in Chile voted to strike. Glencore and Anglo
American jumped 3.02p to 178.4p and 43.2p to £19.68, respectively, while silver miner Fresnillo climbed to the top of the FTSE 100 leaders, up 52.8p to 992.8p, a rise of 5.6pc.
Gold miner Centamin also received a boost after revealing it was on track to meet its full-year guidance after second-quarter revenue jumped 54pc. Sales were driven by stronger production and higher prices for precious metal.
It also revealed it had produced 130,994 ounces of gold – which is currently above the $1,800 an ounce mark – from its Sukari mine in Egypt during the second quarter of 2020. Centamin shares rose 3.6p to 191.5p.
Meanwhile, Boohoo continued to plummet after Standard Life Aberdeen, the UK’s largest listed asset manager, dumped the majority of its stock in the fast-fashion retailer on Friday. Adding to the bad news, Bank of America cut its price target for the retail company from 475p to 350p.
In a note to clients it said that costs at Boohoo could increase by between £10m to £20m as it tries to fix issues in its supply chain. “The key unknown is the extent to which underpayment of workers is prevalent,” a team at Bank of America, led by analyst David Holmes, wrote.
“If small scale, bad actors can be identified, relationships terminated and capacity shifted to abiding factories. The incremental cost in such a scenario should be limited.”
Boohoo, which has insisted there is no evidence its suppliers are paying staff less than the minimum wage, ended 49.5p lower at 230p, a fall of 17.7pc.
Elsewhere, G4S shares led the mid-cap risers on the back of a positive statement despite plans to cut 1,000 jobs in its cash handling division.
The group said it expects first-half earnings to be significantly higher than the £159m that equity analysts are predicting and brought forward the earnings release date to the week commencing July 20. It rose 11.05p, or 9.25pc, to 130.5p.
Other notable risers yesterday were chemicals group Johnson Matthey, up 93p to £22.07, and hospitality group Intercontinental Hotels, which rose 111p to £38.85.