Sector movers: Resource stocks recover from previous lows

Resource stocks recovered on Wednesday in tandem with an uptick in metal prices, while oil futures tumbled lower still.

Both major indices stayed in negative territory as the FTSE 100 closed 0.14% or 8.54 points lower at 6,126.68, while the FTSE 250 ended 0.30% or 52.05 points lower at 17,139.85.

Metal futures saw further upticks over a less volatile session despite unconvincing macroeconomic data but oil benchmarks continued to slide further. At 1758 GMT, the Brent front month futures contract was down 1.02% or 34 cents at $39.85 per barrel, while the WTI was down 0.72% or 27 cents at $37.17 per barrel.

Away from the oil market, most metal futures saw upticks during late afternoon trading in Europe. At 1635 GMT, three-month delivery contracts of primary aluminium (up 0.5%), tin (up 0.6%), lead (up 1.5%) and zinc (up 0.9%) were trading higher on the London Metal Exchange. The copper contract, still at historic lows, remained under pressure, but traded up 0.1% to $4,592.50 per metric tonne.

As a consequence, resource stocks Glencore (up 4.57%), Rio Tinto (up 3.88%), BHP Billiton (up 3.68%) and BG Group (up 2.46%) led blue chip stocks higher. On the FTSE 250, Polymetal International (up 4.88%) and Petra Diamonds (up 4.83%) were on the up, but Evraz (down 4.81%) tumbled downwards.

Elsewhere, publishing, media and entertainment stocks had mixed day. Blue chip Education publisher Pearson was on the back foot after Deutsche Bank cut its price target on the stock to 770p from 950p.

It said Pearson is trading on 13x price-to-earnings 2016E and 15x price to free cash flow, which could appear low compared to peers, but Pearson is experiencing organic revenue decline and has not grown more than 1% since 2010.

“With risk of further weak trading in college, low adoption year in school books and the possibility of a significant round of restructuring in 2016, we retain our sell,” DB added.

However, shares in midcap Entertainment One rose after the company confirmed it continues to trade in line with full year underlying earnings expectations, as it responded to recent weakness in its share price.

The stock has been under pressure since the company announced a refinancing deal that will increase its interest payments.

Last Friday, the group said it had priced its £285m offering of 6.875% senior secured notes, saying it would use the proceeds to refinance existing credit facilities in full.