London close: Miners drag FTSE to negative finish

Price: 1,457.50

Chg: -87.50

Chg %: -5.66%

Date: 17:13

Price: 6,834.40 Chg: -26.78 Chg %: -0.39% Date: 16:36

– FTSE closes down 26.78 points at 6,844.51
– Fenner, miners provide drag
– UK consumer confidence out of the red

techMARK 2,812.27 +0.10%
FTSE 100 6,844.51 -0.39%
FTSE 250 16,010.25 +0.35%

Miners dragged the FTSE to a negative finish in today’s session, following what one analyst described as a “directionless” day of trading.

The top tier index closed 26.78 points lower at 6,844.51.

Mining stocks were trading firmly in the red as iron ore prices headed for their sixth consecutive monthly decline, the longest losing streak on record.

Meanwhile, concerns about a slowdown in China were also having an impact on stocks, as well as a profit warning from Fenner, which makes conveyor belts for the mining industry.

“The day has seen a range of just over 30 points for the FTSE 100, with the 6870-6880 range once again proving too much for the index,” IG Chief Market Strategist Brenda Kelly said.

“Most of the damage has been done by miners, who are down on China concerns and slumping iron ore prices, although banks are decidedly mixed as the market digests the news of a possible jumbo fine for BNP Paribas that has sent shares in the French bank down to eight-month lows.

“The FTSE continues to pose a nagging question about its upward progress, and it will have escaped few peoples notice that current levels have been followed by swift and brutal selling. Aimless trading cannot go on forever, and the longer we fail to push towards 7,000 the greater the likelihood that another trip to 6,500 is in order.”

UK consumer confidence out of the red for first time in nine years

The GfK barometer of consumer confidence in the UK for May improved to a reading of 0 in comparison with -3 the month before.

The consensus estimate had been for a print of -1. Mays data marked the first non-negative reading since the same month of 2005.

In other macro news, the pace of economic growth in Britain picked up in May to its fastest since 2003, according to the Confederation of British Industry (CBI). A positive balance of 35% of respondents to the survey said activity had accelerated during the month, versus 25% in April.

The UK economy seemed to have continued to grow strongly going into the second quarter thanks to rising business and consumer confidence, better credit conditions at home and improving global economic conditions, the business lobby added.

Meanwhile, the UK publics expectations for inflation over the coming year rose to 2.1% in May from 2% in the previous month, according to a YouGov survey.

Inflation is forecast to increase to 3.1% in the next five to 10 years, compared to an April estimate of 2.9%.

Citi, which sponsors the survey, said the inflation expectations are not high enough to force the Bank of England to raise interest rates regardless of the pace of economic growth.

“But nor do trends in inflation and inflation expectations justify the Monetary Policy Committee keeping rates ‘low for longer’ in the face of strong economic growth and rising capacity use, Citi added.

Miners slide on iron ore and China concerns

Mining stocks were trading firmly in the red as iron ore prices were headed for their sixth consecutive monthly decline, the longest losing streak on record.

Meanwhile, concerns about a slowdown in China were also having an impact on stocks, as well as a profit warning from FTSE 250-listed Fenner, which makes conveyor belts for the mining industry.

Anglo American, Rio Tinto, BHP Billiton, Fresnillo, Randgold Resources, Antofagasta, and Glencore were all big losers today.

Rising iron ore supplies from Australia and Brazil have prompted a 9% fall in prices this month, with the value of the commodity having now fallen every month since December. This is the longest string of monthly losses since data from The Steel Index began in November 2008, according to Bloomberg.

DIY retailer Kingfisher was continuing to fall after an underwhelming first-quarter statement yesterday as Barclays Capital cut the shares to ‘equal weight’ and trimmed its target price.

Meanwhile, medical device maker Smith & Nephew continued to soar as bid speculation continued to drive the stock higher. While US peer Stryker was forced to publicly deny reports that it was working on a bid for the company, its boss yesterday confirmed in an interview that the company had in fact been in the early stages of considering a transaction but was not ready to make an offer. UBS this morning added the stock to its ‘M&A Watch List’.

On the second tier, polymer products maker Fenner slumped after warning that underlying group profit before tax for the current fiscal year could be reduced by as much as 10-15% below the current consensus market expectation of 77.6m.

FTSE 100 – Risers
Admiral Group (ADM) 1,458.00p +2.10%
Smith & Nephew (SN.) 1,046.00p +1.65%
Sainsbury (J) (SBRY) 346.10p +1.61%
Marks & Spencer Group (MKS) 449.20p +1.45%
Severn Trent (SVT) 1,968.00p +1.39%
Whitbread (WTB) 4,186.00p +1.16%
Carnival (CCL) 2,425.00p +1.08%
InterContinental Hotels Group (IHG) 2,355.00p +1.03%
Persimmon (PSN) 1,338.00p +0.91%
United Utilities Group (UU.) 868.00p +0.87%

FTSE 100 – Fallers
Anglo American (AAL) 1,457.50p -5.66%
Rio Tinto (RIO) 3,057.00p -4.12%
BHP Billiton (BLT) 1,868.00p -3.74%
Fresnillo (FRES) 806.00p -3.47%
Randgold Resources Ltd. (RRS) 4,357.00p -3.01%
Antofagasta (ANTO) 788.50p -1.99%
Johnson Matthey (JMAT) 3,212.00p -1.89%
CRH (CRH) 1,637.00p -1.62%
Glencore (GLEN) 323.35p -1.49%
Kingfisher (KGF) 392.00p -1.26%

FTSE 250 – Risers
Redefine International (RDI) 59.20p +5.53%
Xaar (XAR) 864.00p +5.24%
Supergroup (SGP) 1,166.00p +5.14%
Perform Group (PER) 277.00p +4.53%
Euromoney Institutional Investor (ERM) 1,189.00p +4.48%
Ocado Group (OCDO) 386.70p +3.81%
Diploma (DPLM) 654.00p +3.81%
Dairy Crest Group (DCG) 467.00p +3.78%
Foxtons Group (FOXT) 329.90p +3.74%
Hikma Pharmaceuticals (HIK) 1,705.00p +3.46%

FTSE 250 – Fallers
Fenner (FENR) 350.00p -10.19%
Evraz (EVR) 104.80p -4.03%
Paragon Group Of Companies (PAG) 375.70p -3.37%
Restaurant Group (RTN) 598.00p -2.84%
Home Retail Group (HOME) 188.40p -2.79%
African Barrick Gold (ABG) 217.00p -2.56%
Grainger (GRI) 217.00p -2.47%
Vedanta Resources (VED) 1,100.00p -2.40%
BlackRock World Mining Trust (BRWM) 457.50p -2.29%
Lonmin (LMI) 256.90p -2.25%


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