Market Report: Kazakhmys climbs on copper price hopes

Kazakhmys was the strongest of the blue-chip miners last night, rising by more than 4 per cent, or 40p, to 954p, as investors piled in on hopes of copper price gains.

Analysts at Bank of America-Merrill Lynch said stocks exposed to the metal stood to gain as better economic times were likely to bring supply constraints back to the fore. This in turn should drive prices, the broker explained, raising its 2010 copper price forecast by 59 per cent.

"We believe the structural supply shortages have not been resolved for many industrial metals," Merrill said. "Copper concentrates, for instance, remain in short supply. This is not set to change through 2010 and we expect the copper market to move into deficit by 2011."

Kazakhmys, "with its higher operational and financial leverage", was likely to outperform during a copper price spike, the broker added. Besides upgrading the stock to "buy", Merrill upped its earnings estimates for the group by 74 per cent for 2010, and by 61 per cent for 2011.

The broker was less keen on Fresnillo, the silver miner which eased by 1.2 per cent, or 7.5p to 632p. "We believe industrial metals could outperform precious metals on the back of a global economic recovery. While we continue to see Fresnillo as a world-class silver producer, we do see the shares as fairly valued," Merrill said, downgrading the stock to "neutral" from "buy".

Overall, the FTSE 100 weakened by 24.24 points to 4647.13, while the FTSE 250 edged up by 23.57 points to 8266.08, as the profit-taking trend persisted in parts of the market, offsetting gains elsewhere.

Lloyds went to pole position on the FTSE, rising to 93.2p, up 10.6 per cent or 8.93p, after posting interim results, unveiling pre-tax loss. Traders attributed the share-price rally to the comments suggesting that impairments may have peaked in the first half. The wider sector was pleased by the prospect, with the Royal Bank of Scotland, which is due to update the market tomorrow, rising to 48.7p, up 4.4 per cent or 2.07p, and Barclays advancing by 2.4 per cent, or 8p, to 336.5p.

Elsewhere, on the down side, oil companies were weak after oil prices fell in response to the latest US government inventory data, which evidenced a build-up in crude stocks. Royal Dutch Shell was the weakest here, easing to 1528p, down almost 4 per cent or 62p, while BG retreated to 999.5p, down 3.6 per cent or 37.5p.

On the second tier, Aegis, which was supported by an Altium circular in the session before, enjoyed another positive session, rising by 2.6 per cent or 2.2p to 87.8p following words of support from Goldman Sachs. Calling the market's stance "too bearish", the broker added the stock to its widely followed "conviction buy" list of stocks.

Recent underperformance has left Aegis – the cheapest agency stock, according to Goldman – undervalued, while consensus estimates for both the first-half and the full-year period "are too cautious", the broker said, sticking to its 122p target price for the shares.

"Reuters' first-half consensus implies a year-on-year decline of close to 14 per cent in organic revenues and 240 basis point margins in the second quarter," Goldman said,

"However, given the positive impact of new business in the second quarter, we believe organic revenues will be down less than 13 per cent, and given the restructuring costs already taken, headline margins should only be down 200 basis points."

Further afield, house-builders were in focus after Taylor Wimpey spoke of signs of stability in the housing market. The stock, down 3.2 per cent, or 1.26p, at 38.75p, was unsettled nonetheless, as the market digested news of further write-downs. In the wider sector, fellow house-builder Barratt Developments rallied to 214p, up almost 7 per cent or 13.4p, thanks to UBS, which upped its target price for the stock to 240p from 180p, while reiterating its "buy" stance on the prospect of a possible equity issue.

"Given that the group has already lost out on some attractive land opportunities because of a relatively inflexible cash-deployment situation, we expect an equity issue may be made in due course," the broker said, adding that such a move would allow the group to purchase land at the bottom of the current cycle, while putting it on track for improved profitability in the years ahead.

Also on the upside, JP Morgan moved Arriva, which was almost 7 per cent or 29.7p stronger 474.5p, to "overweight" in a new transport sector review. The broker was less keen on sector peer Firstgroup, which was broadly unchanged at 346p, down 2p, after being downgraded to "neutral" in the same review.

Bank of America-Merrill Lynch supported VT, which edged up by 0.7p to 461.5p, after the broker issued a "buy" note, highlighting potential public sector opportunities.

"The growing consensus that the UK Government will have to curtail public spending is a potential source of opportunity for the outsourcers," Merrill said. "It seems likely that an efficiency drive will entail a greater role for the private sector, something that VT specialises in."

PROMOTED VIDEO
News
business
News
Mick Jagger performing at Glastonbury
people
Extras
indybest
Life and Style
beautyBelgian fan lands L'Oreal campaign after being spotted at World Cup
Sport
Germany's Andre Greipel crosses the finish line to win the sixth stage of the Tour de France cycling race over 194 kilometers (120.5 miles) with start in Arras and finish in Reims, France
tour de franceGerman champion achieves sixth Tour stage win in Reims
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

JQuery Developer (JQuery, C#, front-end, JQuery, UI, Tomcat)

£40000 - £45000 per annum: Harrington Starr: A Global Financial Service Organ...

Linux Systems Administrator - UNIX, Linux, Shell, Bash

£50000 - £60000 per annum: Harrington Starr: Linux Systems Administrator - UNI...

UNIX Systems Administrator - Oracle DBA, UNIX, Scripting

£40000 - £45000 per annum: Harrington Starr: UNIX Systems Administrator - Orac...

Linux Systems Administrator - (Support, Linux, UNIX)

£40000 - £55000 per annum: Harrington Starr: Linux Systems Administrator - (Su...

Day In a Page

The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice
Hollywood targets Asian audiences as US films enjoy record-breaking run at Chinese box office

Hollywood targets Asian audiences

The world's second biggest movie market is fast becoming the Hollywood studios' most crucial
Grindr founder Joel Simkhai: 'I've found love on my dating app - and my mum keeps trying to hook me up!'

Grindr founder Joel Simkhai: 'I've found love on my dating app'

Five years on from its launch and Grindr is the world's most popular dating app for gay men. Its founder Joel Simkhai answers his critics, describes his isolation as a child
Autocorrect has its uses but it can go rogue with embarrassing results - so is it time to ditch it?

Is it time to ditch autocorrect?

Matthew J X Malady persuaded friends to message manually instead, but failed to factor in fat fingers and drunk texting
10 best girls' summer dresses

Frock chick: 10 best girls' summer dresses

Get them ready for the holidays with these cool and pretty options 
Westminster’s dark secret: Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together

Westminster’s dark secret

Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together
A History of the First World War in 100 Moments: Dulce et decorum est - a life cut short for a poet whose work achieved immortality

A History of the First World War in 100 Moments

Dulce et decorum est: a life cut short for a poet whose work achieved immortality
Google tells popular music website to censor album cover art in 'sexually explicit content' ban

Naked censorship?

The strange case of Google, the music website and the nudity take-down requests
Howzat! 8 best cricket bats

Howzat! 8 best cricket bats

As England take on India at Trent Bridge, here is our pick of the high-performing bats to help you up your run-count this summer 
Brazil vs Germany World Cup 2014 comment: David Luiz falls from leader figure to symbol of national humiliation

David Luiz falls from leader figure to symbol of national humiliation

Captain appears to give up as shocking 7-1 World Cup semi-final defeat threatens ramifications in Brazil