Miners climb steeply as US economy fears grow
MINING and oil firms led the charge yesterday, pulling the FTSE 100 forward by 1pc, or 63.77 points to 6273.40.
Poor employment data out of the US on Friday was the first bit of good news for the FTSE mining giants. A disappointing number of jobs created across the pond in May is causing analysts to think the Federal Reserve will be slow about its next interest rate rise, which had been expected imminently.
But after the FTSE closed, Fed boss Janet Yellen suggested another rise was on the way although it is thought the chances of such a move this month are unlikely.
That’s bad for the dollar which, in turn, means some light for commodities, which become cheaper and therefore more in demand if the greenback falls.
Anglo American had the strongest climb of the day, rising 11.1pc, or 68.7p, to 686.6p. Rio Tinto advanced 6.4pc, or 120.5p, to 2015.5p while
BHP Billiton gained 6.3pc, or 52.2p, to 885.8p. And it’s not just a weaker dollar helping the mining rally.
While a ‘Remain’ outcome from the fast-approaching EU referendum is still the bookies’ favourite, a ‘Leave’ vote is looking increasingly likely according to the latest polls. If the outcome is ‘Leave’ then many analysts believe sterling will take a hit. As a result, many experts are snapping up shares in firms which get most of their earnings from outside the UK so they won’t be so affected by any currency movements.
Mining is one of the most obvious choices particularly because their shares have taken a knock so seem relatively cheap anyway.
Glencore was another of the top movers for the day climbing 6.2pc, or 8.5p, to 144.1p. Antofagasta was not far behind, ticking up 5pc, or 21.7p to 450p, while BP (up 2.75pc or 9.85p to 368.4p) and Fresnillo (up 2.58pc or 29p to 1152p) were also among the highest risers of the day.
But they do say one man’s meat is another man’s poison. The ongoing EU uncertainty is causing housebuilders to crumble. At the other end of the market, Crest Nicholson slipped 2pc, or 12p, to 572p while Persimmon plunged 1.5pc, or 30p, to 2027p. Barratt lost 1.6pc, or 9p, to 569p and Taylor Wimpey tumbled 1.1pc, or 2p, to 188.5p.
Mortgage broker LSL P roperty Services didn’t escape the negativity either, falling back 1.4pc, or 4.5p, to 311.25p, while estate agents Savills stumbled 2.7pc, or 21p, to 759p.
Coca-cola HBC fizzed up 4.7pc, or 62p, to 1394p after a company update. The soft drinks bottle maker said it was on track with its mediumterm growth targets.
Indivior fell the furthest in the day despite Deutsche Bank raising its target on the stock.
Shares in the speciality pharma firm plummeted 10.7pc, or 25.1p, to 210p.
Swallowfield was sitting pretty after an acquisition and trading update. The Aim-listed firm makes personal care and beauty products including shower gels, deodorants and lip pencils. It is behind brands including the Real Shaving Co and Bagsy make-up.
Yesterday it announced it had bought Brand Architekts, also a
beauty product manufacturer which has brands Argan, Dirty Works and Happy Hair Days among its portfolio.
Swallowfield raised £8.6m in a share placing to help fund the acquisition, which was for a total consideration of £11m.
Swallowfield also said its operating profits for the first three months of the year were £0.64m, up from £ 0.16m, last year. Shares leapt 21.2pc, or 34.5p on the news to 197.5p.
James Fisher had less success with investors after its acquisition announcement. The service provider for the marine industry bought Return to Scene for £1.9m on Friday. The business, which provides digital services to the oil, gas and security sectors, is a subsidiary of SeaEnergy, an Aberdeen-based energy services provider which went into administration just last Thursday. Shares in Fisher sank 0.7pc, or 9p, to 1319p.
Eco Animal Health announced it had received marketing authorisation for a chicken medication. The medicine is already used under veterinary prescription for respiratory and gut diseases in poultry and pigs. Shares finished sunny side up 4.5pc, or 17.5p to 407.5p.