Anglo American stuns analysts with 31pc rise in just two days
ANGLO American enjoyed its biggest weekly gain in five months as the short squeeze on the back of the dollar’s weakness continued to revive the FTSE 100 stock.
The mining giant found itself occupying the position of biggest laggard on the blue-chip index momentarily in early trade yesterday, before extending Thursday’s gains. Weakness in the greenback made dollarpriced commodities cheaper. Copper rallied as a result and mining stocks followed.
Shares in Anglo have risen 30.6pc in just two days, and analysts at Investec said the rally was “like nothing we recall”.
“We need a sustained period of disincentive pricing to balance the commodities market and thereby stabilise the sector,” the broker added.
The FTSE 100 stock made gains of 85.9p, or 30pc, this week to close at its highest level in two months, at 363.4p.
Despite its strong performance, Chris Beauchamp, an IG analyst, cautioned: “We have yet to see a real shift in the fundamental backdrop to warrant a more extended rally in these beaten-down firms, even if iron ore prices in China have looked firmer of late.”
Other mining stocks had a mixed session; some failed to claw their way out of negative territory despite Thursday’s rally. Glencore advanced 2.5pc to 102.2p yesterday, while
Antofagasta was 3.7pc better at 446.3p.
Ahead of its full-year results next week, Rio Tinto dipped into the red – down 2.2pc to £18.18. Its peer BHP
Billiton slipped 0.5pc to 709.2p. Traders attributed the mixed performance to the world’s largest steel maker, ArcelorMittal, who unveiled plans to raise $3bn in fresh capital in a bid to reduce debt in the face of weak steel and mining sectors. On the wider market, the
FTSE 100 fell 50.7 points, or 0.86pc, to 5,848.06 after the latest US jobs report sparked fresh concerns about the prospects of a Fed rate hike this year. Jobs growth slowed in January, as nonfarm payrolls increased by 151,000 and unemployment fell to 4.9pc.
Elsewhere, electronics distributor Premier Farnell rallied 7.3p, or 7.3pc, to 106p following the sale of its industrial products unit, Akron Brass, for £124.8m to IDEX Corporation.
Henry Carver, of Peel Hunt, said the price tag was £25m more than expected.
“The deal will remove a drag on management’s time, reduce leverage considerably and clear the way for re-focusing on the core Element 14 business,” he said.
Shares in Barclays slipped following two bearish broker notes, which pointed to a tough banking environment. Bernstein and Jefferies both slashed their target prices. Jefferies warned the bank may be unable to sustain ordinary dividend payments this year. As investors digested the cautious notes, the shares fell 0.5p to 173.2p.
Meanwhile, Just Eat rose 19.4p to 379.4p amid plans to buy four online delivery businesses from Rocket Internet. The mid-cap stock has been rocked in recent weeks by a slew of bearish broker notes that suggested it was losing market share to its UK rivals.
On Aim, Faroe Petroleum ticked 8.3pc higher to 58.5p after production for the year came in at the upper end of guidance.
Finally, Regenersis edged up 5.4pc to 201p after it struck a deal to sell its repair business to CTDI. Charles Hall, of Peel Hunt, said the “transformative” deal will turn it into “a pure play technology business in a fast-growing market”.