London close: Equities lower as mining stocks weigh

A slump in mining stocks weighed on UK equities on Monday as commodity prices declined.

Fresnillo, Randgold Resources and Anglo American dominated the list of fallers on the FTSE 100, dragged lower by a slump in metal prices. On the Comex, silver plunged 2.16%, gold dropped 0.25% and copper dipped 1.06%.

Oil prices were also under the cosh on news that Iraq – OPEC’s second-biggest oil producer – will boost its oil exports by 5%. A stronger dollar and a jump in the Baker Hughes US oil-rig count also weighed on prices. Meanwhile, investors are losing hope that a deal on stabilising the market will be made at next month’s unofficial OPEC meeting.

Meanwhile, investors continued to digest hawkish remarks from several Federal Reserve officials last week and awaited comments from Fed chair Janet Yellen at the central bank’s annual conference on Friday in Jackson Hole, Wyoming.

Added to the above, Fed Vice Chairman Stanley Fischer on Sunday gave an upbeat assessment of the US economy, which was seen to suggest an interest rate hike was possible this year.

The attention now turns to Yellen, with the market hoping for clues on the timing of the next interest rate increase.

Oanda’s Craig Erlam said Yellen’s speech would be a great opportunity to send a clear and concise message to investors.

“The markets currently have March priced in for the next rate hike and if Yellen is seriously determined to move earlier, she must take advantage of Friday’s opportunity to drive that message home,” he said.

Elsewhere, Bank of Japan Governor Haruhiko Kuroda said he would not rule out another interest rate cut if needed.

In an interview with the Sankei Shimbun newspaper, published Saturday, Kuroda said, "Based on our comprehensive assessment, there is a fair amount of possibility that we will conduct additional measures without hesitation, if necessary."

Analysts expect he will expand further on monetary policy at a speech on Tuesday at the BoJ’s Fintech Conference.

On the corporate front, housebuilders rallied after a report from Countrywide predicted UK house prices will fall by 1% next year on Brexit uncertainty but will recover with a 2% increase in 2018. The declines were, however, nowhere near Chancellor George Osborne's forecasts in May for a 10-18% fall in house prices by 2018 in the event the UK voted to leave the EU.

Taylor Wimpey, Barratt Developments and Berkeley Group were among the top risers on the FTSE 100.

Persimmon was also in the black ahead of its half year results on Tuesday, with analysts expecting the housebuilder to shrug off the impact of the EU referendum with a surge in profits. Deutsche Bank expects Persimmon to report a 26% increase in earnings before interest and tax for the first half.

Travis Perkins was on the front foot as Canaccord Genuity trimmed its price target on the stock but reiterated its ‘buy’ rating, saying it sees the stock as “structurally attractive over the medium term and see value under the scenario of a relatively mild recession”.

Debenhams gained as news emerged that its Irish business has been saved after the High Court approved a restructuring programme that will safeguard 1,330 jobs and will mean its Irish subsidiary will exit examinership.

Going the other way, BHP Billiton, BP, Royal Dutch Shell and Cairn Energy fell on the drop in oil prices.

Miner and steel producer Evraz edged lower as analysts at Shore Capital wondered if investment company Yellow Dragon - which is meant to be teaming up with Bushveld Minerals (BMN) to buy Evraz's Vametco - had got "cold feet or money troubles" after selling its entire 50m holding of BMN shares earlier this month.

Market Movers

FTSE 100 (UKX) 6,828.54 -0.44%
FTSE 250 (MCX) 17,872.08 -0.01%
techMARK (TASX) 3,510.33 -0.08%

FTSE 100 - Risers

Taylor Wimpey (TW.) 158.70p 3.52%
Barratt Developments (BDEV) 463.50p 2.84%
Persimmon (PSN) 1,794.00p 2.63%
Berkeley Group Holdings (The) (BKG) 2,550.00p 2.53%
Capita (CPI) 1,037.00p 2.07%
Provident Financial (PFG) 2,916.00p 1.89%
Dixons Carphone (DC.) 375.90p 1.76%
Travis Perkins (TPK) 1,583.00p 1.67%
International Consolidated Airlines Group SA (CDI) (IAG) 390.10p 1.35%
Intu Properties (INTU) 312.70p 1.20%

FTSE 100 - Fallers

Fresnillo (FRES) 1,825.00p -5.88%
Anglo American (AAL) 835.00p -4.02%
Randgold Resources Ltd. (RRS) 8,020.00p -3.95%
Antofagasta (ANTO) 545.00p -3.45%
Rio Tinto (RIO) 2,379.50p -2.72%
Glencore (GLEN) 184.35p -2.23%
BHP Billiton (BLT) 1,033.00p -1.90%
Royal Dutch Shell 'B' (RDSB) 1,974.00p -1.79%
DCC (DCC) 7,040.00p -1.54%
BP (BP.) 427.90p -1.48%

FTSE 250 - Risers

Debenhams (DEB) 62.30p 4.09%
Crest Nicholson Holdings (CRST) 455.80p 3.66%
Redrow (RDW) 357.00p 3.63%
Ted Baker (TED) 2,584.00p 3.32%
Galliford Try (GFRD) 1,081.00p 3.25%
William Hill (WMH) 325.00p 3.21%
Bellway (BWY) 2,223.00p 3.16%
Greencore Group (GNC) 353.10p 3.16%
Countryside Properties (CSP) 242.00p 3.07%
Ocado Group (OCDO) 288.60p 3.03%

FTSE 250 - Fallers

Acacia Mining (ACA) 567.50p -5.02%
Hochschild Mining (HOC) 298.70p -4.66%
Evraz (EVR) 143.60p -4.46%
Cairn Energy (CNE) 194.80p -3.94%
Centamin (DI) (CEY) 170.50p -3.78%
Vedanta Resources (VED) 531.00p -3.45%
Diploma (DPLM) 859.00p -2.77%
Kaz Minerals (KAZ) 189.90p -2.57%
Vesuvius (VSVS) 369.00p -2.41%
Polymetal International (POLY) 1,155.00p -2.37%