Market Report: Miners exploit a rich seam of broker sentiment

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The Independent Online

As if the market hadn't backed mining enough of late, the sector's standard-bearers were off and running once more, driven by rising copper prices and bullish broker sentiment. The price of copper, the most important single metal to the UK-listed miners according to one analyst, rose as supply disruptions hit the market while demand remained undimmed. Some see no end to its growth and have backed the price to rise from the year-to-date average of 310 cents per pound to 400 cents by the end of the year. Research from JP Morgan also buoyed the diversified miners yesterday, saying they "should continue to generate strongly positive earnings throughout the downturn". Kazakhmys, which was up 4.2 per cent to 1360p, and Xstrata, up 2.9 per cent to 3360p, were the best performers.

The growth was not confined to the top tier, as Hochschild Mining set about reversing last month's share price slump. The group, whose value fell by a quarter to 299p in five months, announced a strategic alliance and ended among the biggest climbers on the FTSE 250. It signed a strategic alliance with Exmin Resources, which will boost its operations in Mexico. It finished the day up 15.25p at 374.25p.

The FTSE 100 opened up, off the back of the miners and positive trading in the US on Friday. It closed the day up 22.6 points at 6712.

Finally a ray of sunshine for poor old Tate & Lyle, whose shares have plummeted 27 per cent this year, earning it a place among the 10 worst performers on the FTSE 350. Fortunately for the sugar and starch producer, backing from Credit Suisse had investors indulging their sweet tooth and it finished top of the blue-chip risers. The Swiss-based broker said the company enjoys "the best of all worlds". Specifically a low valuation, unappreciated ingredients business, strength in commodities and good seasonal prospects. It closed up 4.7 per cent at 580p.

Shares in the luxury car and engine manufacturer Rolls-Royce were revving again after it landed an engine contract worth $1.3bn. This followed an "encouraging" trading update last week and $15bn-worth of contract wins announced in the Paris Air show in June.

Traders were left scratching their heads over a note from Goldman Sachs on BSkyB, which is gearing up for its investor day tomorrow. A few were surprised that its outlook on the stock remains "neutral". While the US broker may have raised the target price from 600p to 620p, the valuation is a substantial discount to the current trading price of 671p. One trader wondered how low a valuation has to be before the stock is marked "sell".

Bid chat drove Carpetright shares up by as much as 39p in early morning trading on the mid-tier. The group's founder, Lord Harris of Peckham, has reportedly been in talks with HBOS and a Saudi investment group over a £900m bid. The shares softened towards the end of trading, closing at 1120p.

Bovis Holmes shares fell over 10 per cent following a disappointing first-half trading update. The stock closed on 820.5p after the company admitted visitor and reservation rates had slowed down and completed homes were below market expectation.

Premier Foods, which owns brands including Mr Kipling, of "exceedingly good cakes" fame, failed to produce an exceedingly good statement, causing a sharp drop in the share price. It closed at a 4.6 per cent discount at 279.75, after revealing a fall in like-for-like sales.

Among the small stocks, Tertiary Minerals suffered on its return to the AIM market following a voluntary suspension. It announced that losses had quadrupled in the first half over the previous year because of an increase in costs. The group suspended its shares in January following uncertainty over its exploration licence in Saudi Arabia, which it has now confirmed.

That sinking feeling also hit Global Marine Energy, the mechanical handling equipment producer, as it warned on full-year profits. The group, which finished the day as AIM's highest faller, said income would be "materially worse" than expectations relating to the closure of its UK manufacturing businesses. It ended the day down more than a third at 12p.

Finally some good news for Israel-based SimiGon, the simulation and training company. After a profit warning last month the group's share price almost halved, but has begun recovery after a contract win yesterday. Its technology was chosen for the Joint Strike Fighter programme, in partnership with Lockheed Martin. The broker Panmure Gordon said: "The value of the contract should exceed SimiGon's entire lifetime revenues to date." It rose 19p to 77.5p.

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