Sector movers: Natural resource stocks tumble but market rebounds

Natural resource stocks tumbled again on Tuesday, but the wider market saw an uptick courtesy of financial, defence and aerospace stocks.

The FTSE 100 ended 1.99% or 122.38 points higher at 6,268.76, while the FTSE 250 closed 1.43% or 240.41 points higher at 17,084.79, with confidence in natural resource stocks remaining low as oil and metal futures struggle to reverse recent declines.

At 1642 GMT, the Brent front-month futures contract was down 1.23% or 55 cents at $44.01 per barrel, having risen as high as $44.35 in early trading before shedding the gains. Meanwhile, WTI was 1.63% or 68 cents lower at $41.06 per barrel, having recouped some of the previous session’s losses.

Meanwhile, the three-month copper delivery futures contract, dragged down to historic lows in recent sessions, fell another 0.4% to $4,685 per metric tonne on the London Metal Exchange. Additionally, primary aluminium (up 0.9%), nickel (down 0.8%), tin (up 0.1%), zinc (down 1.1%) and lead (up 0.2%) LME futures showed little sign of a recovery.

Concurrently, precious metals fell into negative territory, dragged lower by gold. COMEX gold futures contract fell 1.64% or $17.80 to $1,065.80 an ounce while spot gold was 1.29% or $13.99 lower at $1,068.77 an ounce. Away from gold, COMEX silver was down 0.61% to $14.14 an ounce, while spot platinum fell 1.33% or $11.50 to $854.50 an ounce.

Invariably, Anglo American (down 5.07%), Randgold Resources (down 2.46%), Glencore (down 0.79%) and Antofagasta (down 0.61%) were among the biggest fallers on the FTSE 100. Among the midcaps, Petra Diamonds (down 3.05%) tumbled to end up among the FTSE 250’s biggest fallers.

However, Kaz Minerals (up 16.12%) and Ophir Energy (up 7.34%) were among the biggest FTSE 250 gainers. In a trading update, Kaz Minerals said it had reached an agreement with its principal construction contractor, Non Ferrous China, to defer payment of $300m (£198m) relating to the company’s Aktogay project.

Under the revised terms, cheered by investors, the construction costs which were due to be paid in 2016 and 2017 will be settled in the first half of 2018. Ophir Energy surged after Credit Suisse upped its stance on the stock to ‘neutral’ from ‘underperform’ and lifted the price target to 100p from 90p following the capital markets day.

“We partly de-risk the value of the Fortuna floating liquefied natural gas project in Equatorial Guinea,” said the investment bank, noting that Ophir seemed increasingly confident to sanction the project by mid-2016.

For the FTSE 100, Hargreaves Lansdown (up 3.81%) and Old Mutual (up 3.81%) registered decent gains. Aerospace and defence group Rolls-Royce (up 5.11%) was a high riser, in line with the rest of the sector, which benefited from growing expectations of a security spending blitz in Europe following the terrorist attacks in Paris.

However, Smiths Group (up 10.21%) was the standout gainer after its first quarter results showed resilience. The company said sales declined only 4% as solid trading performances by the detection and medical businesses made up for most of the weak markets endured by its oil and gas customers.