Sector movers: Miners see mixed fortunes as commodities turmoil continues

Mining and metal stocks saw mixed fortunes on Friday as selected sector blue chips and energy stocks continued to drag the London market lower.

The FTSE 100 ended 0.98% or 60.40 points lower at 6,118.28, while the FTSE 250 closed 0.56% or 93.87 points lower at 16,775.63. Oil futures took another hammering, as the International Energy Agency warned that global crude stockpiles were currently at a record high of 3bn barrels.

At 1642 GMT, the Brent front-month futures contract was down 0.82% or 36 cents to $43.70 per barrel. Meanwhile, WTI was 2.80% or 91 cents lower at $40.58 per barrel, as the IEA opined the oil glut looks set to continue into well into the next year.

"The massive [supply] cushion has inflated even as the global oil market adjusts to $50 per barrel. Demand growth has risen to a five-year high of nearly two million barrels per day," the agency said. "Gains in demand have been outpaced by vigorous production from OPEC and resilient non-OPEC supply."

Elsewhere, the decline in base metal futures was reversed in European trading. On the London Metal Exchange, the three-month copper delivery futures contract, dragged down to historic lows in recent sessions, was broadly flat at $4,838.00 per metric tonne.

Additionally, primary aluminium (up 1.0%), nickel (up 0.1%) and tin (up 0.1%) futures were on the up, while zinc and lead contracts were broadly flat. Precious metals largely stayed in negative territory, but COMEX gold futures contract saw marginal gains of 0.6% or 60 cents to $1,081.60 an ounce.

Light end of week short covering helped reverse the fortunes of mining blue chips. Anglo American (up 1.37%), BHP Billiton (up 1.04%) and Randgold Resources (up 0.71%) were among the biggest gainers on the FTSE 100, but Glencore (down 3.25%) continued to struggle.

Biggest fallers on the FTSE 250 included several resource stocks with Petra Diamonds (down 6.48%), Ophir Energy (down 4.08%), Nostrum Oil & Gas (down 4.07%) and Kaz Minerals (down 3.56%) in the mix. Elsewhere, within midcaps, diversified mining company Vedanta Resources (down 0.10%) was hit by a credit ratings downgrade from Moody’s.

In a market alert issued on Friday, the ratings agency said Vedanta Resources’ corporate family rating (CFR) had been downgraded to Ba2 from Ba1. Concurrently, the company's senior unsecured ratings were downgraded to B1 from Ba3, with a negative outlook on all ratings.

Kaustubh Chaubal, senior analyst at Moody’s, said: “The downgrade of Vedanta's ratings primarily reflects our view that the company's operating performance will remain weak against the backdrop of persistently weak commodity prices."

Vedanta Resources reported consolidated revenue of $5.7bn and consolidated EBITDA of $1.3bn, down 12% and 39% respectively from a year ago, in its half year filing for the current fiscal year.

Away from resource stocks, B&Q owner Kingfisher was in the red. The company is due to release third quarter earnings on 24 November and Jefferies had a note out on the stock on Friday saying it expects the group to confirm a mixed French performance. “We anticipate another good showing in UK sales, albeit diluted by the start of stock clearance as the cleaning up of the tail starts,” said Jefferies, which rates the stock at ‘hold’ with a 350p price target.

Aerospace and engineering firm Rolls-Royce suffered losses for a second day running – albeit much less severe – after it said on Thursday that earnings for the year will be at the low end of guidance as it downgraded its expectations for next year and warned of a possible dividend cut.