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
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test