Mining stocks drag on FTSE 100 after Fed signals US strength
Mining stocks fell in reaction to lower gold and silver prices.
Mining stocks on London’s top tier index fell into the red on Thursday, as investors reacted to a drop in precious metal prices sparked by hawkish signals from the US Federal Reserve.
The FTSE 100 ended the day down 0.1% or 8.05 points at 7,263.9, weighed down by the likes of Antofagasta down 21.5p to 922p, Randgold Resources 170p to 7,300, and Fresnillo down 32p to 1,410p.
It comes after the US central bank signalled that it was ready to start unwinding its quantitative easing programme, suggesting renewed confidence in the health of the American economy.
The news meant there was less reason for investors to turn to safe haven assets like gold.
David Madden, a market analyst at CMC Markets UK, said: “Randgold Resources and Fresnillo are some of the biggest fallers on the London market as the underlying gold and silver markets are lower due to the Federal Reserve update last night.
“The US central bank was more hawkish than expected, and this prompted a drop in silver and gold – markets already in decline for nearly two weeks.”
In currency markets, sterling climbed around 0.5% versus the US dollar to 1.355, and rose 0.1% against the euro to 1.135, bouncing back from earlier declines.
Mr Madden added: “The GBP/USD is also making up for lost ground in the wake of last night’s US dollar surge. The prospect of a rate hike from the Fed at the end of this year dented the pound yesterday, but today we are seeing a rebound in sterling.”
Across Europe, the French Cac 40 and German Dax rose around 0.5% and 0.2%, respectively.
Brent crude prices were flat at $56.18 per barrel.
Investors were poised for news from a meeting between Opec, Russia and other major oil producers set to take place in Vienna on Friday. The group is likely to consider whether to extend production cuts in a bid to quell the global oil glut.
In UK stocks, Capita tumbled 74.5p to 569.5p, making it the worst performing stock on the FTSE 250.
It comes after the outsourcing giant reported a 26% drop in pre-tax profits following a series of disposals, including its specialist recruitment arm, part of its Capita Europe business and its events operation.
Kier shares topped the FTSE 250, rising 69p to 1,164p after the construction group swung back to profit as it cheered a robust performance from its property and residential arm.
Drax fell 6.4p to 308.9p after it was confirmed that CEO Dorothy Thompson – who was appointed in 2005 – has decided to leave the company by year-end and will be replaced by chief financial officer Will Gardiner from January.
News of another CEO departure sent Compass Group shares down 41p to 1,571p. The catering giant said that Richard Cousins will leave on March 31 before retiring from the board by the end of the following September.
Mitchells & Butlers fell 10.8p to 236.4p after reporting that like-for-like drink sales fell 1.2% in the eight weeks to September 16 in a sharp reversal of the 3.8% surge seen in the previous 10 weeks.
The biggest risers on the FTSE 100 were Johnson Matthey up 432p to 3,390p, ITV up 4.7p at 166.9p, Anglo American up 37.5p at 1,331.5p, and Lloyds Banking Group up 1.74p at 67.45p.
The biggest fallers on the FTSE 100 were Kingfisher down 12.8p at 300.2p, J Sainsbury down 9.9p at 234.3p, EasyJet down 32p at 1,198p, and Compass Group down 41p at 1,571p.