Sector Movers: Mining, oil stocks recover from pre-Easter slump

Natural resources shares led the London market with mining companies reversing pre-Easter declines in the first day of trading after the festive period.

At 15:55 BST on Tuesday, the FTSE 100 was trading up 1.93% or 131.79 points at 6965.25. Mining companies lifted the market, being among the best performing shares of the day, as risk appetite increased among investors.

Rio Tinto completed a bigger-than-expected off-market share buyback due to strong demand. Meanwhile, copper miner Antofagasta was trading higher after Jefferies kept a 'buy' rating, saying: "We expect the company's strengths to lead to share price outperformance during the current period of macro weakness."

The day began with general positivity being transferred over from the mining-heavy ASX, after the Reserve Bank of Australia (RBA) left its benchmark interest rate unchanged at 2.25%, despite local anticipation of a cut as the country attempts to boost its economy.

Analysts still expect the RBA to cut the main policy rate further, quite possibly at its next policy meeting on 4 May but there was no stopping mining stocks from reversing their pre-Easter losses.

When focus switched to London, mining stocks continued to perform well with the sector index up 2.91% or 391.66 at 13,866.60 points. Antofagasta (up 2.79%), Glencore (up 3.28%), Rio Tinto (up 3.89%) and Vedanta Resources (up 6.32%) were among the top sector performers.

Continuing with the natural resources theme, despite prevailing uncertainty in the oil markets, oil and gas together with oilfield services stocks were seen trading in the green shaking off the past week’s declines as Saudi Arabia increased its asking price of Asian clients.

Premier Oil (up 12.88%), Hunting (up 8.89%), Ophir (up 6.9%), BG Group (6.89%), Cairn Energy (up 6.65%), Tullow Oil (6.32%) and Petrofac (up 5.25%) ensured oil and gas stocks made up majority of top 10 performers in the first day of full trading after Easter.

Of particular significance was BG Group’s agreement to acquire stakes in two blocks in Mongolia from Petro Matad, due to be explored later in the year. Giving details, BG Group said it had acquired a 78% stake in Block IV and Block V in central Mongolia from Petro Matad in return for covering the latter’s share of a $28m work programme and paying an additional $4.5m.

Continuing with the sector, troubled independent explorer Afren saw 6.01% uptick following the appointment of Alan Linn as its new CEO. He is expected to take-up the post after Afren’s $300m “imminent” bailout has been completed.

Afren saw its share price tumble 99% after it was discovered back in October that its then chief executive, Osman Shahenshah, together with a number of other executives, had allegedly accepted hidden payments from a foreign partner. The group had been looking for a new chief executive since then.

Finally, food and drug segment benefitted from retailer Marks & Spencer’s rating being upgraded to 'buy' from 'hold' by Societe Generale.

Top Five Sectors:

Oil Equipment, Services & Distribution 19,239.94 +781.46 +4.23%
Oil & Gas Producers 7,284.46 +277.22 +3.96%
Mining 13,866.60 +391.66 +2.91%
Forestry & Paper 14,465.93 +398.54 +2.83%
Food & Drug retailers 3,408.15 +90.02 +2.71%