FTSE 100 movers: Miners reverse downward trend

The FTSE 100 had rebounded from Monday’s losses by mid-afternoon Tuesday, with the blue chip index up 39.12 points (0.64%) to 6,132.55.

Miners Glencore, Anglo American, Fresnillio and Rio Tinto reversed their losses from the start of the week and led the risers after news the UK construction sector rebounded in December from a seven-month low, led by commercial building activity.

The Markit/CIPS construction purchasing managers’ index rose to 57.8 from 55.3 in November, beating expectations for a reading of 56. Commercial construction remained the best performing sub-category of activity, with the latest upturn the fastest since October 2014.

Tim Moore, senior economist at Markit, said: “UK construction companies finished 2015 in a positive fashion, as overall output growth recovered from November’s seven-month low. Across the UK construction sector as a whole, the latest survey indicated a strong degree of optimism about the outlook for 2016, with firms mainly citing a strong pipeline of commercial development projects and new housing starts.”

Tesco was also one the market’s stars of the day after Deutsche Bank upgraded the stock from ‘hold’ to ‘buy’ while cutting its target price from 210p to 200p ahead of Christmas trading figures due out later this month.

The investment bank said in its note that its earnings per share estimates for Tesco were lowered by 10%, but highlighted that sector share prices have declined more than 10% in the past two months, underperforming a broadly flat market.

However it said while Tesco has a disappointing topline performance, it has the strongest valuation support. “We lower our Tesco UK Q3 and Q4 LFL forecasts from +0.1% to -2.5% and from -2.3% to -3.4% respectively. The strong valuation support we refer to relies on meaningful UK EBIT margin progression, from +0.5% in H1 15/16 to a normalised 2.2% by 18/19.”

Balancing out the big risers was Next, which had fallen over 5% on the day after its post-Christmas trading update. The retailer said sales were below expectations but said profits were within the range of guidance after the clothing retailer held back from discounting until Boxing Day.

With the mild weather "mainly" to blame, full price retail sales fell 0.5% in the period from 26 October to 24 December, which was short of estimates and distinctly underwhelming compared to the rest of the year. Full price sales from its Directory catalogue were up 2.0%, meaning total sales were up just 0.4%, both well below estimates as the weather was exacerbated by poor stock availability from October onwards as well as the admission that "the online competitive environment is getting tougher".

Investors also weren’t impressed with Sainsbury’s, after it revealed it is still considering making a takeover offer for Home Retail after a November approach for the FTSE 250 retail group was rejected.

The grocer said it was considering its position but there was no certainty that this will result in a formal offer, after the board of the Argos and Homebase owner rejected its initial shares-and-cash proposal before Christmas. Sainsbury's, which last year began trialling a number of Argos concessions in its stores, originally founded Homebase before selling the DIY chain in 2000 for an initial £635m cash in a dual transaction with Schroder Ventures and Kingfisher.

FTSE 100 - Risers

Glencore (GLEN) 89.49p 4.95%
Anglo American (AAL) 288.65p 3.89%
Fresnillo (FRES) 731.50p 3.10%
Travis Perkins (TPK) 1,991.00p 2.84%
Rio Tinto (RIO) 1,955.00p 2.76%
Tesco (TSCO) 146.00p 2.64%
Bunzl (BNZL) 1,889.00p 2.61%
TUI AG Reg Shs (DI) (TUI) 1,237.00p 2.49%
International Consolidated Airlines Group SA (CDI) (IAG) 608.50p 2.10%
Vodafone Group (VOD) 220.00p 1.85%

FTSE 100 - Fallers

Next (NXT) 6,825.00p -5.08%
Sainsbury (J) (SBRY) 244.60p -4.19%
Aberdeen Asset Management (ADN) 272.60p -3.33%
Burberry Group (BRBY) 1,122.00p -1.58%
Berkeley Group Holdings (The) (BKG) 3,557.00p -1.50%
Direct Line Insurance Group (DLG) 387.10p -1.40%
Standard Chartered (STAN) 536.30p -1.00%
Associated British Foods (ABF) 3,244.00p -0.98%
St James's Place (STJ) 968.00p -0.92%
BAE Systems (BA.) 489.80p -0.75%