Market Report: China revival helps miners out of a hole
Friday 09 August 2013
Good news out of China helped the UK's benchmark index back in to the black after four days of losses and pushed miners to the top of the leaderboard. China's exports and imports data was better than expected for July and metal diggers such as Anglo American soared more than 4 per cent.
China is the world's biggest metals consumer and miners have been hit this year by volatile commodity prices. Any sign of improvements is followed by traders piling in to the companies that dig up and sell the hard stuff.
Mike van Dulken, the head of research at spread-better Accendo Markets, said: "The bigger-than-expected rebound in exports adds weight to the thesis of global recovery while a surge in imports suggests mounting confidence within the world's number-two economy, itself a function of perceived growth abroad.
Anglo collected 59.5p to 1454.5p, commodities giant Glencore Xstrata advanced 9.95p to 280.4p and Chilean miner Antofagasta added 32p to 876.5p.
Rio Tinto reported an 18 per cent drop in underlying half-year profits but the results were broadly as the City expected and the Australian group moved up 63p to 3,016.5p after detailing its cost-cutting plans.
The overall market benefited from the magnetism of the digging stocks and the FTSE 100 added 18.47 points to 6,529.68.
Alastair McCaig, market analyst at spread-better IG, said: "Broadly speaking the balance of good and bad news has balanced itself out, doing little to guide the market either higher or lower."
Moving on from miners, insurers and financial stocks were occupying a lot of interest as Aviva doubled its half-year pre-tax profit to £605m and its shares hit a two-year high, up 28.2p to 399p.
But fund manager Schroders said its assets under management fell by more than expected in the second quarter and it was the worst performer on the blue-chip index, down 133p to 2,368p.
Oil giant BP dipped 1.75p to 441.8p when a US court ordered it to pay $130m (£84m) to a court-appointed administrator for the 2010 Gulf of Mexico oil spill. The decision was announced in the US after the UK market closed on Wednesday.
Luxury goods group Burberry promoted Pascal Perrier and Andrew Maag to the newly create jobs of regional chief executive officers and the shares were 13p smarter at 1,563p.
Investors were unhappy that energy services group Amec reported a below-forecast £158m profit for the half year. The equipment supplier to the oil, gas, mining, nuclear and renewable energy sector cut its revenue outlook for the year and traders were concerned about falling demand.
Amec lifted its dividend by 15 per cent and Oriel Securities' analysts said this could be followed by an even bigger payout "depending on the progress of acquisitions". The shares lost around 1.5 per cent in early trade but recovered and closed 4p better at 1,079p.
On the mid-tier index, transport group Firstgroup was getting attention as vague rumours circulated that private equity could be taking a look at the group. The shares travelled up 7p to 111.9p.
Defence specialist Cobham reported revenue 3 per cent weaker. It was hit by US defence cuts and lost 3.9p to 295.6p. Betting group Ladbrokes fell 8.1p to 199.6p after it reported its half-year profit had halved.
Soft-drinks bottling group Coca-Cola HBC reported profit up 3 per cent for the six months to the end of June and the shares fizzed up 64p to 1,900p.
Brisk summer trade at pubs group Enterprise Inns helped it report an improvement in trading for the past five weeks and the shares celebrated with a 7.3p gain to 148p.
Small-cap miner Avocet Mining revealed details of a new plan to cut costs and improve the production at its Inata gold mine in the face of the falling gold price. It reported second-quarter results in line with expectations and the shares glistened up more than 34 per cent, 2.92p to 11.5p.
Aim-listed US oil and gas explorer Empyrean Energy surged 0.25p to 6.65p after US oil major Marathon Oil issued a promising update. Marathon operates Empyrean's Sugarloaf project in Texas.
Concha, the media and technology investment company run by Chris Akers, has bought a 30 per cent stake in media design agency The Works. Mr Akers, who floated Leeds United on the London Stock Exchange, will return Concha to the market today having raised around £1m through a share placing. The shares were suspended at 0.3p.
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