London midday: Miners tank as copper prices plunge on growth concerns

Stimulus hopes in the Eurozone weren’t enough to ease the pain being felt on UK stock markets on Wednesday as resource stocks plunged on the back of concerns about global growth.

The FTSE 100 was down 1.6% at 6,437 by midday, with mining stocks falling sharply as a gloomy economic outlook hammered copper prices, while oil producers tracked crude prices lower.

Copper prices slumped nearly 6% to a low of $5.353.25 a metric tonnes, falling to its lowest since mid-2009, after the World Bank slashed its growth forecasts for the global economy.

The World Bank now expects 3% growth in 2015 and a 3.3% expansion in 2016, compared with previous estimates of 3.4% and 3.5% respectively, and said that “risks to the outlook remain tilted to the downside”.

Although the slide in oil prices eased by lunchtime, Brent crude was still down 0.2% at $46.52 a barrel ahead of US government data which is expected to show that oil stockpiles in the Stateside increased last week.

Officials in the United Arab Emirates and Kuwait were cited as saying that prices will only recover when demand improves later this year with a global supply glut expected to persist into the second half.

As a result of the recent collapse in oil, data on Tuesday showed that consumer-price inflation in the UK slowed more than forecast to just 0.5% in December, its lowest since May 2000. Bank of England governor Mark Carney has reportedly said that deflation in Britain is now “possible” in the near future.

In other news, hopes for quantitative easing (QE) in the Eurozone were boosted ahead of the European Central Bank’s (ECB) policy meeting next week after ECB president Mario Draghi was quoted as saying that he is ready to buy government bonds. In an interview with German newspaper Die Zeit, Draghi said that loose monetary policy is needed to achieve price stability in the Eurozone.

Meanwhile, a leading lawyer at the European Court of Justice claimed that outright monetary transactions were compatible with EU law as long as certain conditions are met, which some economists said effectively gave the green light to full blown quantitative easing by the ECB.

Mining stocks drop, Game Digital plummets

Mining stocks fell across the board though those exposed to the copper sector were hit the hardest, such as Antofagasta, Glencore and Anglo American. Glencore fared the worst out of the three, falling nearly 11% to a new record low.

FTSE 250 diversified miner Vedanta Resources and copper producer Kaz Minerals were down 17% and 20% respectively.

Oil stocks such as Shell, BP, BG Group, Tullow Oil and Premier Oil were also tracking the price of crude lower.

Nevertheless, the standout faller of the morning was Game Digital which dropped 32% after delivering a profit warning. The video-games and console retailer said that full-year profits would be “broadly in line” with last year after a “highly competitive” Christmas.

Burberry was slightly lower despite saying that reported retail sales growth accelerated strongly in the third quarter, though it highlighted a slowdown in the high-margin market of Hong Kong. The high-end luxury fashion group said retail revenues totalled £604m in the three months to 31 December, up 14% on last year.

AstraZeneca was among the best performers after a large-scale clinical trial of its Brilinta tablets for patients with a history of heart attack met its primary endpoint, with the treatment resulting in a significant reduction in major cardiovascular thrombotic events.

Fashion retailer Supergroup surged after strong Christmas trading performance underpinned its full-year profit guidance. Like-for-like sales grew by 12.4% in the 11 weeks to 10 January.

Market Movers
techMARK 2,971.09 -0.74%
FTSE 100 6,436.56 -1.61%
FTSE 250 15,933.99 -0.94%

FTSE 100 - Risers
Tesco (TSCO) 217.15p +2.43%
Royal Mail (RMG) 436.80p +2.06%
BT Group (BT.A) 405.50p +1.43%
Hammerson (HMSO) 635.50p +1.36%
International Consolidated Airlines Group SA (CDI) (IAG) 494.50p +1.10%
Land Securities Group (LAND) 1,218.00p +0.83%
Barratt Developments (BDEV) 428.50p +0.71%
United Utilities Group (UU.) 949.00p +0.64%
AstraZeneca (AZN) 4,742.00p +0.53%
Sky (SKY) 905.50p +0.50%

FTSE 100 - Fallers
Glencore (GLEN) 239.90p -10.80%
Anglo American (AAL) 1,036.00p -9.56%
Antofagasta (ANTO) 655.00p -7.62%
BHP Billiton (BLT) 1,262.50p -6.96%
Rio Tinto (RIO) 2,754.00p -5.68%
Weir Group (WEIR) 1,619.00p -4.31%
Fresnillo (FRES) 796.00p -4.27%
Tullow Oil (TLW) 354.80p -3.82%
Aggreko (AGK) 1,484.00p -3.64%
Intertek Group (ITRK) 2,281.00p -3.47%

FTSE 250 - Risers
Supergroup (SGP) 888.50p +9.49%
Saga (SAGA) 161.50p +4.19%
Just Eat (JE.) 341.80p +3.73%
Debenhams (DEB) 71.45p +2.07%
Allied Minds (ALM) 380.00p +1.88%
IP Group (IPO) 221.90p +1.88%
Dignity (DTY) 1,819.00p +1.68%
De La Rue (DLAR) 520.50p +1.56%
Jimmy Choo (CHOO) 174.50p +1.45%
CLS Holdings (CLI) 1,486.00p +1.43%

FTSE 250 - Fallers
Game Digital (GMD) 235.00p -32.47%
Kaz Minerals (KAZ) 185.10p -19.70%
Vedanta Resources (VED) 400.60p -17.47%
Afren (AFR) 24.51p -5.33%
BlackRock World Mining Trust (BRWM) 299.00p -4.93%
Polymetal International (POLY) 541.00p -4.59%
Premier Oil (PMO) 130.70p -4.32%
Acacia Mining (ACA) 281.00p -3.96%
Spire Healthcare Group (SPI) 341.00p -3.51%
Petrofac Ltd. (PFC) 596.50p -3.40%