London close: Stocks finish firmer amid buoyant silver price

London stocks closed in the green on Monday, with precious metals miners pacing the advance as silver prices surged.

The FTSE 100 ended the session up 0.92% at 6,466.42, and the FTSE 250 was ahead 0.81% at 20,392.62.

Sterling was in a mixed state, last trading 0.2% weaker against the dollar at $1.3681, but gaining 0.37% on the euro to €1.1329.

“Stocks are set to finish higher as the fear that dominated the markets last week has faded,” said CMC Markets analyst David Madden.

“The swarm of retail investors that descended upon GameStop recently has turned its attention to silver.

“Similar tactics were applied, whereby it was discussed on Reddit that the hoard would snap up the metal in a bid to squeeze the price higher.”

Madden said it was “remarkable” that a band of retail players could help lift an enormous market like silver by such a large extent, noting at one point it was up more than 10%.

“The wider markets are in good shape, probably because a high single digit percentage move in silver poses less of a threat to certain hedge funds than a colossal short squeeze on selected stocks.”

David Madden also pointed to reports that Melvin Capital took a $7bn hit from the GameStop saga.

“In the midst of Melvin’s suffering, other investment groups started to cut and run.

“Although the Reddit-retail investor-fuelled silver rally is a big deal, there have been no obvious losers from the move, which has helped keep a lid on stability fears.”

In equity markets, precious metals miner Fresnillo closed up 8.95% as those silver prices were targeted by Reddit retail traders.

Peers were also higher, with Polymetal rising 5.12%, Hochschild ahead 10.43% and Centamin 1.92$ firmer.

“Retail traders are herding into silver in the same way they have driven the likes of GameStop over the last week,” said Neil Wilson, head of markets at Markets.com.

“Prices gapped up from Friday’s settlement at $26.914 to north of $28 and quickly cleared out the daily resistance from the 1 September high at $28.91, and then kicked on to $30 by the start of the European session.”

Wilson questioned whether gold could be next.

“I doubt it, but we live in interesting times.

“What we don’t know is exactly how this is happening - clearing out of shorts by worried hedge funds, retail-driven bid, ETFs flows driving the physical market, smart-money front-running the trade, or a combination of all these.”

Miners and housebuilders were also on the rise, with Barratt Developments up 3.79%, Persimmon ahead 3.37%, Anglo American rising 3.21%, and Glencore 1.42% firmer.

CMC Markets analyst Michael Hewson suggested housebuilders could be up on "optimism over the UK economy seeing an easing of restrictions sooner rather than later as the vaccine rollout hit a new milestone as the government announced that all care home residents had been offered a jab".

Elsewhere, JD Sports Fashion rallied 7.04% after agreeing to buy DTLR Villa, a US sports retailer, for $495m (£360m), of which about $100m would be used to repay debt.

Outside the FTSE 350, online fashion retailer Asos gained 6.88% after buying four brands from the collapsed Arcadia Group for £330m.

On the downside, education publisher Pearson was knocked 5.59% lower by a downgrade to ‘sell’ from ‘buy’ at UBS.

Investment platform Hargreaves Lansdown lost 4.51% despite lifting its interim dividend and reporting a 10% rise in first-half profit.

Market Movers

FTSE 100 (UKX) 6,466.42 0.92%
FTSE 250 (MCX) 20,392.62 0.81%
techMARK (TASX) 4,079.19 0.48%

FTSE 100 - Risers

Fresnillo (FRES) 1,076.00p 8.95%
JD Sports Fashion (JD.) 799.00p 6.96%
Polymetal International (POLY) 1,660.50p 5.03%
London Stock Exchange Group (LSEG) 9,080.00p 4.54%
Associated British Foods (ABF) 2,204.00p 4.11%
Barratt Developments (BDEV) 664.20p 3.98%
M&G (MNG) 182.70p 3.87%
Berkeley Group Holdings (The) (BKG) 4,350.00p 3.84%
Taylor Wimpey (TW.) 151.80p 3.65%
Kingfisher (KGF) 287.70p 3.60%

FTSE 100 - Fallers

Pearson (PSON) 767.20p -5.59%
Hargreaves Lansdown (HL.) 1,636.00p -4.24%
British Land Company (BLND) 440.00p -1.94%
Royal Dutch Shell 'A' (RDSA) 1,316.00p -1.64%
BP (BP.) 267.10p -1.62%
Royal Dutch Shell 'B' (RDSB) 1,254.00p -1.43%
AstraZeneca (AZN) 7,388.00p -1.37%
Sainsbury (J) (SBRY) 242.30p -0.86%
British American Tobacco (BATS) 2,645.00p -0.47%
Diageo (DGE) 2,937.00p -0.41%

FTSE 250 - Risers

Hochschild Mining (HOC) 254.00p 10.43%
IWG (IWG) 330.60p 5.49%
Dunelm Group (DNLM) 1,215.00p 5.10%
Provident Financial (PFG) 256.20p 4.57%
IP Group (IPO) 99.00p 4.21%
ITV (ITV) 109.75p 3.64%
Aston Martin Lagonda Global Holdings (AML) 2,103.00p 3.60%
Airtel Africa (AAF) 82.30p 3.52%
Frasers Group (FRAS) 442.00p 3.46%
Ferrexpo (FXPO) 291.40p 3.26%

FTSE 250 - Fallers

Hammerson (HMSO) 21.33p -7.90%
Micro Focus International (MCRO) 417.30p -6.25%
TUI AG Reg Shs (DI) (TUI) 338.60p -4.08%
Rathbone Brothers (RAT) 1,550.00p -3.73%
Liontrust Asset Management (LIO) 1,235.00p -3.52%
Capital & Counties Properties (CAPC) 135.80p -3.00%
Shaftesbury (SHB) 543.00p -2.95%
Premier Foods (PFD) 91.10p -2.67%
Sirius Real Estate Ltd. (SRE) 92.40p -2.63%
PureTech Health (PRTC) 390.00p -2.50%