Mighty miners help dig FTSE out of the doldrums
MINERS rode to the rescue of the FTSE 100, lifting some of the gloom as trading rooms were gripped by fear of a potential escalation of hostilities between the US and China.
Anglo American, up 5.1pc, or 79.6p to 1655.8p, led the way followed by majors such as Glencore, BHP and Rio Tinto.
Between them the diggers account for around 8pc of the market, so without their contribution – and the input from a buoyant HSBC, which is a further 7pc of the index – the Footsie would have been in the doldrums.
The reason for the resurgence of the natural resources companies? Well, it was China, silly.
Miners are essentially a one-way bet on the world’s second-largest economy and the globe’s biggest consumer of commodities such as coal and the base metals.
Overnight the People’s Republic, in reply to President Trump’s ratcheting up of Sino-American trade tensions, said it was considering a fiscal stimulus programme to counteract tariffs. So, on what should have been a down day for London stocks, the FTSE 100 mustered a gain of 30.89 points to 7331.12 while the FTSE 250 index added 42.18 points at 20,500.45.
International sabre rattling will continue to mould sentiment, according to Michael Hewson, stocks guru at CMC Markets, as he cautioned against complacency on the issue of trade.
‘ US trade secretary Wilbur Ross’s assertion that China is running out of bullets to retaliate may well be true when it comes to like for like trade tariffs, but it sorely underestimates China’s ability to respond with other measures.’
Outside the Footsie, the big star was Aveva Group, the engineering software developer, shares in which rose 0.9pc, or 24p to 2842p.
They were reacting to new financial targets that were stronger than the market expected. Aveva also appears to be having no problems digesting Schneider Electric, a £3bn acquisition in March. It was a tough day for Alliance
Pharma, one of AIM’s largest companies. Shares lost 10.3pc, or 9.4p, at 81.64p as the drugs group said its profits had been weighed down by higher costs. Shares had advanced 35pc from January to yesterday’s update, meaning management has to do quite a lot more these days to justify the premium stock market rating.
Sticking with the healthcare sector, it was a dour day for Reneuron, the stem cell specialist, which dropped 18.5pc, or 15p to 66p after an unnamed US company pulled out of a licensing deal for some of its technology. Innovaderma did an about-turn that was hard to explain. Up 6pc in early trade after announcing its popular Skinny Tan bronzing range would be stocked in Boots next year, the shares succumbed to a bout of late profit-taking to end down 13.7pc, or 23p, at 145p.
Natural resources once again provided investors with some hope. Anglo Asian Mining, which digs for gold in Azerbaijan, rose 9.3pc, or 5p to 59p after it paid its first-ever dividend. Its fellow precious metals junior
Pan African Resources jumped 6.5pc, or 0.52p to 8.49p after its boss outlined plans to re-configure operations.
And finally, the word ‘frabjously’. Somehow it ended up in a quote ascribed to David Morgan, Mission Marketing chairman, who said the group is confident that not only would it deliver against 2018 forecasts but ‘remains frabjously optimistic about our longterm prospects’.
The term aptly summed up investors’ reaction to results from the advertising and marketing outfit as the shares rose by 9pc, or 4.5p, to 54.5p.