Miners lead recovery as FTSE regains week’s losses
MINERS were among the biggest risers yesterday as the London market recovered all the losses sustained so far this week, giving traders little respite from a frantic few days of trading driven by fears over China’s economic stability and its effect on world growth.
The biggest riser in the FTSE 100 was the mining group Anglo American, which led a clutch of commodity-focused companies higher as copper, silver and platinum all gained value during the day.
However, Anglo’s 9.3pc rise to 726.3p was not enough to make up for the damage done in the past week, when the spectre of a slowdown in China sent traders fleeing from companies exposed to consumption in the world’s second-biggest economy.
Joining the rally yesterday were BHP
Billiton, up 9.2pc or 93p to £11.03, Glencore, which rose 6.5p to 145.4p, and Rio
Tinto, up 149p to £23.49. All of these companies’ shares are lower than they were a month and a year ago.
London’s blue-chip shares were once again marching in lockstep with one another, with all but one of the FTSE 100 stocks gaining ground during the day.
The FTSE 100 closed up 3.56pc or 212.83 points at 6,192.03, surpassing the close on Friday of 6,187.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said the rise was the biggest since October 2011 “and ranks among the top 50 days for the FTSE 100 since inception in 1984”. However, the index is still down almost 13pc since its record-breaking peak on April 27.
The FTSE 250 of mid-cap stocks, which is seen as having a more direct link to the British economy than its global big brother, has had a softer decline. The index rose 1.9pc to 16,921.95 yesterday, and is just over 7pc down from a peak reached in June.
The Beijing authorities reportedly made a surprise intervention into the Chinese stock market in the last hour of trading in Shanghai, helping to buoy shares there by more than 5pc to their first daily gain in six trading sessions, but in doing so aggravated concerns about the sustainability of the rise in values.
The “national team” of traders do not confirm their movements but according to Bloomberg, the intervention was prompted by a desire in the Chinese government to keep prices looking positive ahead of a military holiday on September 3, when the markets will be shut for two days.
The ratings agency Moody’s said China’s interest rate cut and reduction in reserve requirements for banks on Tuesday would ease volatility in lending between banks, providing some stability in the system and encouraging lending. “But the latest policy move is symptomatic of further weakness in the domestic economy and the challenging operating environment for banks,” said analyst Frank Wu.
In the United States, comments from William Dudley at the New York Federal Reserve on Wednesday stirred hopes that the Chinese turmoil would help delay a rise in American interest rates beyond September, despite stronger revised US growth figures published yesterday. The Dow Jones and S&P
500 closed up 2.3pc and 2.4pc respectively. Attention now turns to the Jackson Hole meeting of Federal Reserve officials that will conclude with a speech tomorrow from Fed vicechairman Stanley Fischer on inflation. Back in London,
Whitbread was the only FTSE 100 firm to miss out on the upswing yesterday. The owner of Costa and Premier Inn fell 44p to £47.76, compared with a 92p rise in its rival hotelier
Intercontinental, which closed at £24.27.
Standard Chartered, the banking group with a focus on Asian markets, was among the largest risers, up 49.7p or 7pc to 757p,
followed by HSBC, up 23.5p to 519.7p. Like the miners, the banks have come under pressure this summer from concerns that their core markets are slowing down.
Sticking with banks, midcap lender Aldermore’s announcement that half-year profits had doubled to £44m was enough to merit a 8pc rise in its shares to 300.1p. Meanwhile Onesavings, a fellow challenger bank that has recently joined the stock market, gave back some of its gains made after results on Tuesday, to close down 5pc at 345p.
Strong results from the building materials supplier
CRH helped it retrace some of its recent losses yesterday, rising 5.2pc or 93p to £18.93. The FTSE 100 firm also announced it had bought an American glazing group for £839m to boost its international growth.
Shares in J Sainsbury kept up with the rest of the supermarkets, rising nearly 2pc to 240.5p, after announcing a 4pc pay rise for its staff to pre-empt the Government-mandated increase in the minimum wage.