FTSE 100 continues climb, aided by mining stocks

(Alliance News) - Stock prices in London opened mostly higher on Thursday, with the FTSE 100 boosted by a strong performance in mining stocks.

Miners were performing well thanks to a strong update from Anglo American, and amid expectations of economic stimulus in China.

The FTSE 100 index opened up 37.35 points, 0.5%, at 7,625.55. The FTSE 250 was up 14.90 points, 0.1%, at 19,337.32, and the AIM All-Share was down 0.84 of a point, 0.1%, at 765.28.

The Cboe UK 100 was up 0.4% at 760.73, the Cboe UK 250 was up 0.3% at 16,986.91, and the Cboe Small Companies was down 0.1% at 13,609.09.

In European equities on Thursday, the CAC 40 in Paris was marginally lower, while the DAX 40 in Frankfurt was down 0.3%.

London's stocks had rallied on Wednesday after a shock UK inflation print, which showed consumer prices rose 7.9% annually in June, cooling from 8.7% the month before, and below estimates of 8.2%.

The pound had dropped sharply against the dollar, but regained some ground overnight. Sterling was quoted at USD1.2919 early Thursday, higher than USD1.2890 at the London equities close on Wednesday.

The euro traded at USD1.1218, higher than USD1.1197. Against the yen, the dollar was quoted at JPY139.47, down versus JPY139.65.

"Relief at the UK's headline inflation number is still reverberating around markets. Falls in the price of fuel were the biggest driver of the fast move downwards in the rate of consumer price rises and that trend does not look like it'll be reversed significantly any time soon," said Hargreaves Lansdown's Susannah Streeter.

Brent oil was trading at USD79.50 a barrel, down from USD80.39 late Wednesday.

"Oil prices have steadied around USD79 a barrel amid expectations of lower demand in China, as investors still waiting for more detail about what further economic stimulus from Chinese authorities will look like," Streeter added.

The People's Bank of China said it held its one-year loan prime rate - which serves as a benchmark for corporate loans - at 3.55%. The five-year rate remained at 4.20%.

The move was anticipated by the market, according to FXStreet-cited consensus, with the PBoC also maintaining medium and short-term lending rates earlier this week. However, the market is increasingly expecting the PBoC to cut the LPR in the comings months, given the economic slowdown in the country.

In China, the Shanghai Composite was down 0.9%, while the Hang Seng index in Hong Kong was down 0.2%.

"The expectation that levers will be pulled to boost domestic demand across the world's second largest economy has helped push up commodity stocks, which are among the biggest gainers on the FTSE 100 in early trade," Streeter continued.

Among London's large-caps, Anglo American was the top performer, rising 4.8%.

The miner said production rose 11% year-on-year in the second quarter, which reflects the ramp-up of its new Quellaveco copper mine in Peru. The mine has now reached commercial production levels. It also noted a strong showing from its Minas-Rio iron ore operation in Brazil, and higher production from its Australian open-cut operations in steelmaking coal.

Copper production rose 56% year-on-year to 209,000 tonnes, iron ore rose 8.3% to 15.6 million tonnes, and steelmaking coal rose 28% to 3.4 million tonnes. Meanwhile, nickel fell 3.9% to 9,900 tonnes, while platinum group metals fell 8.6%, diamonds fell 3.8% and manganese ore fell 1.0%.

"Our focus remains resolutely on safely achieving our full year production guidance through the seasonally stronger second half of the year," said Chief Executive Duncan Wanblad.

Fellow miner Glencore was up 2.0%, ahead of Friday's trading statement. Antofagasta rose 1.5%, having lowered its annual production guidance on Wednesday.

Gold was quoted at USD1,982.43 an ounce early Thursday, higher than USD1,975.43 on Wednesday.

In the FTSE 250, Babcock International was up 5.9%.

The defence engineering services firm reported a year of modest profit growth, though profit took a hit due to a loss-making contract. In the year ended March 31, Babcock said revenue rose 8.2% to GBP4.44 billion from GBP4.10 billion year-on-year, though pretax profit shrunk to GBP6.2 million from GBP182.3 million.

This was due to a loss on disposal and related items, as well as the GBP100.1 million type 31 loss related to a contract with the UK Ministry of Defence that Babcock had communicated in April.

Investors seemed pleased with its forward guidance, however. "The outlook statement confirms an expectation of delivering continuing cash-backed profitable growth and reintroducing a dividend in [financial 2024 forecast]. Welcome news then," Shore Capital remarked.

Among small-caps, Lookers dropped 10%, as its potential acquisition lost the support of a shareholder.

Lookers said one its shareholders has withdrawn a letter of intent given to Global Auto Holdings, which made a takeover offer for the car dealer group. Last month, Global Auto Holdings, an operator of auto retail dealerships across North America, said it will pay 120 pence per Lookers share.

Cinch Holdco UK has now withdrawn its letter of intent, and intends to vote against the acquisition. "Lookers is re-engaging with other shareholders to understand whether the resolutions required to effect the scheme of arrangement in order to implement the acquisition are capable of being passed," Lookers said.

In the US on Wednesday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.3%, the S&P 500 up 0.2% and the Nasdaq Composite marginally higher.

Netflix shares dropped 8.3% in after-hours trade.

After the closing bell, the streaming company reported its second quarter results, boasting higher-than-expected subscriber growth, after its password-sharing crackdown. However, revenue missed market estimates, sending its shares lower.

"Netflix had its second-best quarter since the heart of the pandemic, yet, its sales and revenue fell short of expectations due to price cuts in some markets and the unfavourable exchange rate, while [third quarter] forecast disappointed," explained Swissquote Bank's Ipek Ozkardeskaya.

The Nikkei 225 index in Tokyo closed down 1.2%.

Japan posted a JPY43 billion, USD309 million, trade surplus in June, the first surplus in nearly two years, thanks to rising exports of automobiles and construction machines and falls in imports of crude oil, coal and liquefied natural gas, according to data released by the finance ministry. The market had expected a JPY46.7 billion deficit.

The S&P/ASX 200 in Sydney closed marginally higher.

Still to come on Thursday's economic calendar, there's US weekly unemployment claims report at 1330 BST.

By Elizabeth Winter, Alliance News senior markets reporter

Comments and questions to [e-mail]

Copyright 2023 Alliance News Ltd. All Rights Reserved.