Market Report: Miners wobble as traders bank profits

Traders turned the screws on the mining sector last night, with Kazakhmys falling back following a warning on the copper price.

The stock lost 50p to 1,527p as punters booked profits. The trend was given weight by Evolution Securities, which reiterated its negative stance on Kazakhmys. The broker said its caution stemmed from its belief that a correction in the copper price was long overdue, and that high-cost producers such as Kazakhmys would be likely to suffer the most. Sector peer Antofagasta, which also specialises in the base metal, is better placed to weather a slump in the copper price, not just because of its cost profile, but also owing to the strength of its balance sheet, the broker explained. It boasts of a considerable net cash position, Evolution pointed out, whereas Kazakhmys has net debt, which, together with higher production costs, tends to weigh on sentiment when prices tick lower.

"The copper price has got ahead of itself and is due a considerable correction, the beginnings of which we thought had started in January. However, [it] has rallied again, aided by the Chilean earthquake, and again we see scope for a correction," the broker said, reiterating its "sell" view on Kazakhmys, albeit with a revised 1,270p target price, compared to 450p previously. Evolution's assessment notwithstanding, Antofagasta, which was cut to "hold" by Citigroup at the beginning of the week, also lost ground alongside the wider sector, closing 24p lower at 1,021p. The platinum producer Lonmin, which fell to 2,060p, down 53p, and the silver miner Fresnillo, which lost 21p to 846p, were among the other losers last night. Xstrata, which once again was the subject of speculation regarding the possibility of a bid for Australia's Macarthur Coal, was 21p behind at 1,261p.

Overall, the weakness in the heavily weighted mining sector proved a drag on the FTSE 100, which fell to 5,761.66, down 15.99 points, despite growing confidence in the EU-backed rescue plan for Greece. The FTSE 250 was also held back, falling to 1,0418.88, down 62.89 points. Retailers, a number of whom were driven up by bid talk and some benign broker sentiment on Monday, remained firm, with Kingfisher rising by 6.3p to 238.8p and Next adding 20p to 2,323p on the back of some upbeat data from the British Retail Consortium (BRC).

Marks & Spencer at 379.9p, up 4.1p, and Tesco at 449p, up 6.3p, were also marked up after a BRC survey revealed that retail sales rose at their fastest pace in a year last month, jumping by 6.6 per cent owing to the boost provided by shoppers heading out over Easter.

Over in the banking sector, the picture was broadly weak, with Lloyds losing 0.9p to 63.63p, and the Royal Bank of Scotland falling to 44.57p, down 0.33p. Standard Chartered proved more resilient, easing 12p to 1,760p, after analysts at Shore Capital weighed in with some words of support. "The global economy is recovering and Standard Chartered is exposed to regions with high forecast GDP growth," the broker said, initiating coverage with a "buy" stance. "We believe this will underpin further expansion across wholesale and consumer banking, and positively influence future impairment levels."

Elsewhere, the pubs group Punch Taverns shot up, rallying by more than 7 per cent, or 6.1p, to 92p after Panmure Gordon had a change of heart, moving the stock to "buy" from "sell" ahead of the interim results next week. "We think the group will be able to demonstrate stabilisation in the leased pub business," the broker said, adding that while it continued to harbour concerns about Punch's managed pub business, it expected the appointment of a new chief executive to act as positive catalyst for the shares, particularly if the appointee has experience in the managed pubs segment.

The housing sector was subdued, with Barratt Developments relaxing by 2.1p to 122.6p and Bellway closing at 774.5p, down 7.5p. Taylor Wimpey was also held back, losing 0.56p to 38.36p after UBS sounded a note of caution on the company's prospects for growth, which could be constrained unless the North American business is sold. The broker's concerns stemmed from the group's debt position, which it said could limit growth.

"One option could be to sell North America – the group has stated [that] it has had enquiries," UBS said, sticking to its "neutral" view and 43p target price for Taylor Wimpey. UBS said it preferred Barratt, Bellway and Persimmon, which ended 3.8p to lower at 459.9p. Berkeley was better placed, adding 8p to 826p.

Further afield, an endorsement from HSBC failed to lift easyJet, the airline which was 2.4p behind at 473p after the broker issued a sector round-up, initiating coverage on the stock with an "overweight" stance. HSBC said it preferred easyJet to Ryanair, the case for which is clouded by some uncertainty about future margin levels, and by the valuation, which is less compelling. "EasyJet's valuation looks less stretched to us, and we like its growing mix of business traffic, which is supporting yields," the broker said, setting a 570p target price on the low-cost carrier's stock.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: DBA Developer - SQL Server

£30000 - £35000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Customer Service Administrator

£13000 - £15000 per annum: Recruitment Genius: Are you passionate about custom...

Recruitment Genius: Dialler Administrator

£22000 - £25000 per annum: Recruitment Genius: Main purpose: Under the directi...

Ashdown Group: Contracts Manager - City of London

£35000 - £37000 per annum + benefits : Ashdown Group: Contracts Manager - City...

Day In a Page

Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

US betrayal of old ally brings limited reward

Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
VIPs gather for opening of second Suez Canal - but doubts linger over security

'A gift from Egypt to the rest of the world'

VIPs gather for opening of second Suez Canal - but is it really needed?
Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
The male menopause and intimations of mortality

Aches, pains and an inkling of mortality

So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

'How can I possibly be on the list with these writers I have idolised?'

Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

Bettany Hughes interview

The historian on how Socrates would have solved Greece's problems
Art of the state: Pyongyang propaganda posters to be exhibited in China

Art of the state

Pyongyang propaganda posters to be exhibited in China
Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

Vegetarian food gets a makeover

Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks
The haunting of Shirley Jackson: Was the gothic author's life really as bleak as her fiction?

The haunting of Shirley Jackson

Was the gothic author's life really as bleak as her fiction?
Bill Granger recipes: Heading off on holiday? Try out our chef's seaside-inspired dishes...

Bill Granger's seaside-inspired recipes

These dishes are so easy to make, our chef is almost embarrassed to call them recipes
Ashes 2015: Tourists are limp, leaderless and distinctly UnAustralian

Tourists are limp, leaderless and distinctly UnAustralian

A woefully out-of-form Michael Clarke embodies his team's fragile Ashes campaign, says Michael Calvin
Blairites be warned, this could be the moment Labour turns into Syriza

Andrew Grice: Inside Westminster

Blairites be warned, this could be the moment Labour turns into Syriza
HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

The mystery of Britain's worst naval disaster is finally solved - 271 years later

Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

'I saw people so injured you couldn't tell if they were dead or alive'

Nagasaki survivors on why Japan must not abandon its post-war pacifism
Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

The voter Obama tried hardest to keep onside

Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen