Old Mutual leads FTSE higher as ANC appoints reforming leader
SOUTH Africa-exposed Old Mutual and Anglo
American leapt to the top of the FTSE 100 on hopes that a bitter race to become leader of the struggling country’s ruling ANC had been narrowly won by pro-business candidate Cyril Ramaphosa.
Although official confirmation came just after markets closed in Europe, shares in London’s heavily exposed companies slowly gathered momentum in anticipation of the deputy president’s victory.
Mr Ramaphosa is expected to try to combat the nation’s endemic corruption and bring in a pro-markets agenda to help revive its flagging economy. His victory could also see South Africa’s punitive mining charter rewritten to help boost the key sector.
His election could “unleash a positive confidence shock”, according to Russel Matthews, Bluebay’s senior portfolio manager.
As the South African rand soared on currency markets, Johannesburg-based mining giant Anglo American jumped 70.5p to £14.81 while Old Mutual, which is due to split into four businesses next year, climbed 9.7p to 213.1p.
Elsewhere, oilfield services firm Hunting jumped to a six-month high after revealing that the resurgent US shale industry could signal the end of spending constraints.
Hunting advanced 34.5p to 586p after telling shareholders that improved trading in the US could soon mean that bank covenant clauses that have restricted spending are lifted.
Oil prices recovering this year to above $60 per barrel for the first time in two years have opened the door to shale drillers returning to their rigs in shale hotspot the Permian Basin.
The US shale industry was put on the back burner after crude prices crashed on rising supply on the oil market. Although trading has rebounded in its US business, Hunting admitted that its operations in Africa and higher-cost drilling markets, such as Canada and Europe, are still suffering losses.
Low-cost airline Ryanair extended its slide into a sixth day despite its pilots suspending a pre-christmas strike after the Dublin-based firm decided to recognise unions to avoid industrial action.
In a downgrade to “neutral”, Credit Suisse analyst Neil Glynn told clients that he is concerned that the move to placate unions could “significantly” push up staff costs and hang heavily over the company’s outlook. The patch of turbulence has wiped more than €3bn (£2.6bn) off Ryanair’s valuation in just one week with shares slipping yesterday a further €0.34 to €14.65.
Elsewhere, investors piled into equities across the globe as Donald Trump’s sweeping tax cuts inched closer. The reforms, which include US corporate tax being slashed from 35pc to 21pc, came under threat last week from dissenting Republicans in the Senate looking to exploit their party’s slim majority. In the first whiff of a “Santa rally”, equities across Europe rose, with the FTSE 100 climbing 46.44 points to 7,537.01.