London midday: Miners lead equities lower as commodity prices drop

UK equities slid on Monday, led by mining stocks as commodity prices slumped.

Fresnillo, Randgold Resources and Anglo American were the biggest fallers on the FTSE 100 at midday as metal prices declined. Silver prices plunged 1.90%, copper dropped 1.06% and gold dipped 0.56% on the Comex.

Oil prices were also under pressure as the dollar strengthened and data from Baker Hughes showed the number of active oil rigs in the US rose by 10 last week, adding to worries about the supply glut. Hope for a deal on stabilising the market at next month’s unofficial OPEC meeting is also fading.

Brent crude fell 2.6% to $49.57 per barrel and West Texas Intermediate edged down 2.2% to $48.02 per barrel at 1125 BST.

Meanwhile, investors continued to digest hawkish remarks from several Federal Reserve officials last week. The latest comments were from Fed Vice Chairman Stanley Fischer on Sunday when his upbeat assessment of the US economy was seen to suggest an interest rate hike was possible this year. His statement pushed the dollar higher.

The market is now looking ahead to comments from Fed chair Janet Yellen at the central bank’s annual conference on Friday in Jackson Hole, Wyoming.

“We would also expect that Fed Chair Yellen makes it clear during her Jackson Hole presentation that that the risk for a 2016 rate hike remains firmly on the table,” according to Rabobank.

“In the event of data disappointments from the US and a round of far more dovish rhetoric from Fed officials, we would expect a softer USD to emerge."

According to the CME Group’s FedWatch Tool, the chance of a rate hike at the September policy meeting is 88%.

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 the level anticipated by Chancellor George Osborne in Project Fear.

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.

Bodycote gained after JPMorgan Cazenove upgraded the stock to ‘neutral’ from ‘underweight’ and lifted the price target to 605p from 565p, saying its UW thesis on the stock has largely played out.

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

Polymetal International was in the red as part of a sector-wide decline even as it approved the de-bottlenecking project at the Amursk POX plant that will expand capacity by around 50% in terms of concentrate processed.

Market Movers

FTSE 100 (UKX) 6,823.19 -0.52%
FTSE 250 (MCX) 17,846.02 -0.16%
techMARK (TASX) 3,501.62 -0.33%

FTSE 100 - Risers

Taylor Wimpey (TW.) 157.70p 2.87%
Dixons Carphone (DC.) 377.20p 2.11%
Berkeley Group Holdings (The) (BKG) 2,534.00p 1.89%
Barratt Developments (BDEV) 459.10p 1.86%
Persimmon (PSN) 1,779.00p 1.77%
Provident Financial (PFG) 2,904.00p 1.47%
International Consolidated Airlines Group SA (CDI) (IAG) 389.70p 1.25%
Travis Perkins (TPK) 1,576.00p 1.22%
Capita (CPI) 1,025.00p 0.89%
British American Tobacco (BATS) 4,910.50p 0.78%

FTSE 100 - Fallers

Fresnillo (FRES) 1,814.00p -6.45%
Anglo American (AAL) 827.90p -4.84%
Randgold Resources Ltd. (RRS) 7,975.00p -4.49%
Antofagasta (ANTO) 541.00p -4.16%
Glencore (GLEN) 181.30p -3.85%
Rio Tinto (RIO) 2,369.00p -3.15%
BHP Billiton (BLT) 1,024.00p -2.75%
Royal Dutch Shell 'B' (RDSB) 1,973.00p -1.84%
Mediclinic International (MDC) 1,079.00p -1.64%
DCC (DCC) 7,035.00p -1.61%

FTSE 250 - Risers

Aldermore Group (ALD) 137.50p 4.40%
Ocado Group (OCDO) 291.30p 4.00%
Redrow (RDW) 355.40p 3.16%
Debenhams (DEB) 61.65p 3.01%
OneSavings Bank (OSB) 230.10p 2.72%
Crest Nicholson Holdings (CRST) 451.10p 2.59%
Galliford Try (GFRD) 1,074.00p 2.58%
Ted Baker (TED) 2,564.00p 2.52%
Ibstock (IBST) 170.20p 2.35%
Bovis Homes Group (BVS) 854.00p 2.28%

FTSE 250 - Fallers

Evraz (EVR) 140.80p -6.32%
Hochschild Mining (HOC) 294.30p -6.06%
Vedanta Resources (VED) 521.00p -5.27%
Acacia Mining (ACA) 567.50p -5.02%
Cairn Energy (CNE) 194.00p -4.34%
Centamin (DI) (CEY) 170.30p -3.89%
Polymetal International (POLY) 1,140.00p -3.63%
Kaz Minerals (KAZ) 190.40p -2.31%
IMI (IMI) 1,060.00p -2.30%
Shawbrook Group (SHAW) 183.70p -2.18%