Market Report: Upbeat Rio digs the miners out of a hole

 

The City forgot its fears about a major slowdown for Asia’s powerhouse when the miner Rio Tinto revealed its optimistic growth outlook yesterday.Miners slumped recently on the prospects of a slowdown in China but Rio’s update that iron ore shipments were ahead 1 per cent compared with the same period last year and 7 per cent against the first three months of the year helped it to take a spot near the top of the benchmark index.

Its positive outlook for China helped to lift the rest of the metal sector even without a rise in mineral prices.

Alex Young, senior sales trader at the spread-betting group CMC Markets UK, said: “The mining sector has outperformed as a whole, after Rio Tinto confirmed they will follow through on plans to increase iron ore production by a minimum of 10 per cent, banking on a boost to Chinese orders despite wider concerns over the region’s growth outlook.”

The Mexican precious metal miner Fresnillo built up a 57.5p gain to 1,016p while Rio rose 76.5p to 2,883p.

Randgold Resources jumped 207p, or 4.8 per cent, as the fund BlackRock Investment Management upped its stake to 15.3 per cent.

Across the wider market, there was little to get traders excited. David Jones, chief market strategist at the spread-betting group IG, said: “Subdued trade was the order of the day, which, in spite of lower-than-expected UK inflation data and dovish comments from the Bank of England’s Paul Fisher, has seen the FTSE 100 index trade within a 20-point range, lacking both direction and momentum.”

The FTSE 100 finished the day down 29.76 points at 6,556.35.

The bank Standard Chartered was one of the biggest fallers, with traders putting the decline down to profit-taking as the stock had added more than 5 per cent so far this month.

The long-awaited scorching summer has been a boon to most retailers, and the share price of DIY specialist Kingfisher has benefited on the assumption that barbecue sales and garden accessories have been flying off the shelves.

Kingfisher, which owns B&Q in the UK as well as chains including Castorama and Brico Dépôt in Europe, will issue its second-quarter update next week.

Kingfisher’s shares have already risen 28 per cent in the past three months. An improved housing market – which means shoppers spend money on doing up their homes – and signs that Kingfisher will start a share buyback programme this year were both cited as reasons behind the jump.

However, although a raft of analysts upped their price targets yesterday, all said the rise had gone far enough. Nomura did upgrade its sell rating, but only to neutral, and Deutsche Bank kept its neutral recommendation, pointing out that although the UK picture has improved, the French “macro environment remains a key risk” for the group.

But punters were not listening to the analysts’ warnings, and pushed the retailer, which also owns the Screwfix chain, up 4.7p to 383.7p.

The mid-tier health specialist BTG said at its first-quarter update yesterday that it has been trading in line with expectations, and the shares edged up 0.4 p to 395.1p.

Brokers obsessed with the sunshine took a look at the soft drinks maker Britvic. Nomura said that now that the merger with Irn-Bru maker AG Barr is off, there could still be “further upside potential” if the sun continues to shine. It rated the shares a buy with a 580p price target. The owner of Robinsons fruit drinks and Tango, which launched its latest ad campaign last month, will produce its third-quarter update next week. Nomura pointed to “franchise opportunity” as an area of growth. But for now Britvic was unmoved at 510p.

The Aim-listed fashion group Asos stumbled 68p to 4,412p on news that the former head of fashion at Marks & Spencer, Kate Bostock, has left her post as executive director, product and trading, after just seven months.

Sirius Minerals lost 4.25p to 23.25p on fears ahead of a North York Moors National Park Authority planning decision, due later this week, for its mine in the Yorkshire beauty spot.

The Middle Eastern oil explorer Circle Oil jetted up 0.375p to 18.95p as traders expected news of a drilling result from the Aim tiddler. Liberum Capital said some stocks “appear to have been hit too hard” in the oil sector, and rated Circle a buy.

Buy

Unilever

Snap up shares in Unilever, Shore Capital advises. The broker thinks the consumer goods giant’s first-half results next week will reveal positive progress on improved margins. Shore admits there is “potential pressure on short-term earnings” but says its emerging-market exposure and strong balance sheet make it still worth a buy at 2,806p for shares that are at 2,802p.

Sell

Premier Oil

Flog shares in Premier Oil, Liberum Capital suggests. The broker is worried about its costs and although it sold a non-core block in Vietnam yesterday, its analysts “remain concerned about the cost of adding new reserves”. The analysts think Premier should reduce finding  and development costs, and they rate it a sell with a 313p price  target for shares that are currently  at 357.8p.

Hold

Dairy Crest

Hang on to cheese maker Dairy Crest, Panmure Gordon advises. The broker thinks the milk-to-spreads business reported a “slightly disappointing start to the full year 2014 financial year” although it was still in line with management expectations. But Panmure thinks that because the shares have risen by 29 per cent so far this year, they look “fair value” so it rates them a hold with a 500p price target for shares that are currently at 490.2p.

News
people

Actress sees off speculation about her appearance in an amazing way

Arts and Entertainment
Serge Pizzorno of Kasabian and Noel Fielding backstage at the Teenage Cancer Trust concerts
musicKasabian and Noel Fielding attack 'boring' musicians
News
peopleLynda Bellingham's tragic final Loose Women appearance moves audience to tears
Arts and Entertainment
'Right Here' singer Jess Glynne is nominated for Best Newcomer at the MOBO Awards 2014
musicExclusive: Jess Glynne hits out at 'ridiculous' criticism of white artists nominated for Mobo Awards
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Separated at birth? Frank Sivero (left) claims The Simpsons based Mafia character Louie on his Goodfellas character
arts + entsFrank Sivero sues Simpsons studio over allegedly basing mobster character on Frank Carbone
News
Carl Bernstein (left) and Bob Woodward (right) with former 'Washington Post' executive editor Ben Bradlee
people

The Washington Post editor helped Bob Woodward and Carl Bernstein bring down President Nixon

News
news

Voices
Stephanie first after her public appearance as a woman at Rad Fest 2014
voices

Arts and Entertainment
Laura Wood, winner of the Montegrappa Scholastic Prize for New Children’s Writing
books

Children's bookseller wins The Independent's new author search

Latest stories from i100
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

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Trainee Recruitment Consultants

£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London