London close: Mining and metal stocks help end week on a high

Glencore led mining shares higher as investors welcomed its decision to cut 500,000 tonnes or around a third of its annual zinc production as it looks to combat declining prices.

“This is a major move by the company showing leadership in cutting output to help support commodity prices and is more meaningful to the market than the coal supply cuts it previously made,” Investec said.

Gold, silver and industrial metal prices increased following the report, pushing Anglo American, Fresnillo, Antofagasta, BHP Billiton and Rio Tinto into positive territory.

The lift from miners offset a worse-than-expected report on the UK trade deficit. According to the Office for National Statistics, the deficit hit £11.1bn in August compared with forecasts for a £9.9bn figure and an upwardly revised £12.2bn in July. The UK’s deficit on trade in goods and services declined from £4.5bn in July to £3.3bn in August.

Exports of goods rose by £0.8bn to £23.6bn, driven higher by a £0.6bn increase in car exports to a record. Imports declined £0.3bn to £34.7bn over the same period.

The UK’s construction output fell 4.3% against the 1% increase expected, its biggest month to month fall since December 2012.

“This suggests that the impact of the slowdown in China and other emerging markets is beginning to bite, with exports to China down 16% over the three months to August compared with the previous three months,” said Martin Beck, senior economic advisor to the EY ITEM Club.

“These figures suggest that net trade is likely to exert a sizeable drag on GDP growth in the third quarter. There is now some downside risk to our forecast that the preliminary estimate – due at the end of the month – will show GDP growth of 0.6%.”

Meanwhile, the market continued to digest Thursday's meeting minutes from the Bank of England, the European Central Bank and the Federal Reserve.

The BoE on Thursday voted 8-1 to maintain rates at 0.50% and its asset purchase programme at £375bn, as expected by analysts, citing weak inflation, low wages, and potential risks from a slowdown in emerging markets. The meeting minutes revealed policymaker Ian McCafferty again voted for an interest rate increase of 25 basis points.

Analysts were mixed in their predictions for an interest rate rise with some saying February 2016 while others suggesting the BoE might hold off until late 2016 or early 2017.

The European Central Bank's account of its 2-3 September meeting revealed the Governing Council reiterated that it would consider extending the asset purchase programme past September 2016 if needed.

The minutes from the Fed’s 16-17 September meeting showed that the central bank was close to raising interest rates but the risks of China’s economic slowdown hurting US growth stopped them. Policymakers said that a rate hike “might be near” but they would need to monitor developments.

Barclays sees the next rate hike in March next year following weak jobs data.

US total wholesale inventories beat expectations in August, as they rose 0.1% month-on-month compared with a 0.3% downwardly revised decline in July and with analysts’ expectations for a flat reading.

However, the prices the US paid for imported goods declined more than expected in September, data released on Friday showed. Excluding fuel, import prices fell 0.1% month-on-month compared with a 1.6% drop in the previous month and with analysts’ expectations for 0.5% decline.

Vedanta Resources jumped after posting a rise in first half production across most of its commodities, as it said net debt at the end of the quarter is expected to be below $8bn and expressed confidence that it will meet its covenants as at the end of September.

Investors appeared pleased with a report that Standard Chartered’s new chief executive Bill Winters is planning to cut up to a quarter of the bank’s most senior staff in a bid to reduce costs. It’s a move that will likely result in the loss of around 1,000 jobs.

Lloyds Banking Group climbed as the UK government cut its stake by a further 1% to just under 11%. Earlier in the week it emerged that HM Treasury will sell at least £2bn worth of shares to private retail investors in spring next year.

Sports Direct International took a big hit after Morgan Stanley downgraded the stock to ‘equalweight’ from ‘overweight'. It kept the price target at 680p and said the risk/reward is now more balanced.

Market Movers
techMARK 3,050.66 +0.68%
FTSE 100 6,418.76 +0.69%
FTSE 250 17,082.74 +0.46%

FTSE 100 - Risers
Anglo American (AAL) 725.30p +7.06%
Glencore (GLEN) 128.80p +6.76%
Standard Chartered (STAN) 786.60p +5.06%
Ashtead Group (AHT) 1,046.00p +4.50%
Fresnillo (FRES) 734.50p +4.26%
BHP Billiton (BLT) 1,193.00p +4.19%
Babcock International Group (BAB) 984.00p +3.36%
Rio Tinto (RIO) 2,603.50p +3.31%
G4S (GFS) 259.30p +3.06%
Antofagasta (ANTO) 595.50p +3.03%

FTSE 100 - Fallers
Sports Direct International (SPD) 689.50p -6.70%
Persimmon (PSN) 1,950.00p -2.69%
TUI AG Reg Shs (DI) (TUI) 1,212.00p -2.34%
National Grid (NG.) 915.40p -2.06%
Taylor Wimpey (TW.) 192.30p -1.89%
Berkeley Group Holdings (The) (BKG) 3,262.00p -1.72%
St James's Place (STJ) 880.00p -1.68%
Barratt Developments (BDEV) 633.00p -1.63%
United Utilities Group (UU.) 963.00p -1.33%
Dixons Carphone (DC.) 433.80p -1.23%

FTSE 250 - Risers
Electrocomponents (ECM) 214.50p +13.19%
Vedanta Resources (VED) 590.50p +11.42%
Petrofac Ltd. (PFC) 942.00p +9.79%
Kaz Minerals (KAZ) 145.30p +8.59%
Allied Minds (ALM) 398.70p +6.32%
IP Group (IPO) 233.20p +5.86%
Drax Group (DRX) 286.00p +5.61%
Bodycote (BOY) 579.00p +5.27%
Tullow Oil (TLW) 257.20p +4.64%
Pace (PIC) 374.30p +4.38%

FTSE 250 - Fallers
Auto Trader Group (AUTO) 325.70p -4.46%
Savills (SVS) 879.50p -4.09%
Man Group (EMG) 150.70p -4.01%
Crest Nicholson Holdings (CRST) 533.00p -3.35%
Tullett Prebon (TLPR) 357.10p -3.33%
Betfair Group (BET) 3,112.00p -3.14%
JD Sports Fashion (JD.) 935.00p -2.91%
Moneysupermarket.com Group (MONY) 308.50p -2.90%
Close Brothers Group (CBG) 1,496.00p -2.54%
NMC Health (NMC) 812.50p -2.23%

FTSE TechMARK - Risers
Sarossa (SARS) 2.00p +4.71%
Oxford Instruments (OXIG) 660.50p +4.43%
Filtronic (FTC) 7.12p +3.64%
SDL (SDL) 378.75p +2.36%
RM (RM.) 165.00p +1.85%
Spirent Communications (SPT) 76.75p +1.32%
Sepura (SEPU) 173.25p +0.43%
E2V Technologies (E2V) 237.00p +0.32%

FTSE TechMARK - Fallers
XP Power Ltd. (DI) (XPP) 1,560.00p -5.45%
Oxford Biomedica (OXB) 7.28p -3.45%
Ricardo (RCDO) 899.50p -2.28%
KCOM Group (KCOM) 90.00p -1.37%
BATM Advanced Communications Ltd. (BVC) 19.50p -0.64%
Dialight (DIA) 670.00p -0.59%
IShares Euro Gov Bond 7-10YR UCITS ETF (IEGM) € 202.90 -0.15%
Consort Medical (CSRT) 931.00p -0.11%
NCC Group (NCC) 250.25p -0.10%