FTSE steadies after choppy trade, miners rally
Reuters
Published Nov 21, 2016 10:33
FTSE steadies after choppy trade, miners rally
By Atul Prakash
LONDON (Reuters) - Britain's top equity index steadied on Monday, with a fall in defensive stocks offsetting stronger commodities shares that rose following a rally in prices of metals and crude oil.
The blue-chip index (FTSE) was up 0.2 percent by 1014 GMT after moving in and out of negative territory. The mid-cap index (FTMC) underperformed the broader market and fell 0.4 percent following profit warnings by some companies in the index.
"The FTSE 100 has been struggling to rally for a week now, with each bounce getting smaller and smaller," IG analyst Chris Beauchamp said. "Bond yields are a touch weaker, but the increased attractiveness of fixed income means that the dividend stalwarts on the FTSE keep getting hit."
Defensive stocks were on the back foot, continuing the recent trend of a rotation to cyclical sectors. Pharmaceuticals and tobacco stocks were among the top sector fallers.
Shares in GlaxoSmithKline (L:GSK), Shire (L:SHP) and British American Tobacco (L:BATS) were all down around 1 percent.
However, gains in commodities stocks put a cap on the fall, with the UK mining index (FTNMX1770) and oil and gas index (FTNMX0530) falling 1 percent and 1.2 percent respectively.
The two sectors were supported by a rally in industrial metals on expectation of an increase in metals demand, and as oil prices hit a three-week high on a softer dollar and precious metals gain on a pick up in physical buying.
Shares in Randgold Resources (L:RRS), Glencore (L:GLEN), Antofagasta (L:ANTO), Fresnillo (L:FRES), Anglo American (L:AAL) and BP (L:BP) rose 1.2 to 2.1 percent. The top eight gainers in the FTSE 100 index were commodities-related stocks.
However, mid-caps (FTMC) came under pressure on a 20 percent slump in Essentra (L:ESNT) after the supplier of speciality plastic and packaging components cut its full-year adjusted operating profit estimate for a second time this year.
Outsourcing firm Mitie (L:MTO) fell 10 percent after issuing a second warning on its full-year results as customers delayed placing orders due to uncertainty following Britain's vote to leave the European Union and as conditions in its government services business worsened.
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"The UK economy is performing well but Mitie seems to be finding it very hard going. The firm had already seen its share price slump after warning on profits in September and today’s half-year trading statement confirms the outsourcer is in a mess," Neil Wilson, analyst at ETX Capital, said.
Written By: Reuters
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