Market Report: Morgan Stanley rates beleaguered mining sector as 'attractive'

If Morgan Stanley told investors to jump off a cliff, they probably would. That’s the impression you get from the reaction to the American broker’s upgrade on the mining sector.

Morgan Stanley now rates the beleaguered sector as “attractive” after recent share price slumps and reckons the market’s perception of China’s slowdown and demand for industrial metals will improve in the coming months, helped by stimulus measures. Investors piled in and sent mining stocks rocketing, despite the bank warning that “this is not a call for a fundamental change in the industry’s fortunes”.

Rio Tinto, 173p or 7.5 per cent higher at 2,487p, and BHP Billiton, up 48.5p or 4.6 per cent to 1,108p, were upgraded to overweight – broker-speak for buy – while Anglo American shot up 60.3p or 10 per cent to 664.5p.

Trading-cum-mining giant Glencore also continued to dig itself out of a hole, up 6.15p to 124p, helped by a rise in the copper price which also boosted Antofagasta, 39.5p firmer at 576.5p, which meant the top five risers were miners.

The rally helped the FTSE 100 put on 10.19 to 6,336.35, its biggest six-day rally since 2001.

A continued rise in oil prices – Brent crude futures up to $52.27 a barrel – boosted Shell, up 48.5p at 1,815p, and BP, 8.9p richer at 387p.

Airline stocks moved in the other direction on the prospect of pricier fuel, with British Airways owner IAG down 33p to 553.5p. Cruise operator Carnival also had the oil price rise to blame for its share price sinking 158p to 3,285p.

BTG’s shares plunged for a second day, down 55p to 546p after Tuesday’s profit warning, dragging down rival drug-makers, including Hikma Pharmaceuticals, 103p worse off at 2,157p, and Shire, 156p lower at 4,329p. Investors are still wary about Hillary Clinton’s plans to cap drug prices in the US should she become president.

JPMorgan cut its rating to neutral on retail bellwether Marks & Spencer, which shirted a 20.4p fall to 499.1p.

AIM-listed Gemfields lost some sparkle, down 3.5p to 56p.