Sector Movers: Resource stocks rise on positive commodity market sentiment

Resource stocks registered substantial gains on Wednesday, following a positive session on the commodities market.

At the close of proceedings, the FTSE 100 ended 2.87% or 168.15 points higher at 6030.32, while the FTSE 250 ended 2.89% or 454.04 points higher at 16,156.33. Oil futures headed higher following a pledge by major producers to freeze production although Iran’s stance remains far from clear.

Responding to the Saudi-Russian initiative aimed at capping oil production at their respective January output levels, Iranian oil minister Bijan Zanganeh welcomed it, but did not commit to limiting his own country’s production level.

"We look forward to the beginning of co-operation between OPEC and non-OPEC countries and we support any measure that can stabilise the market and increase prices," he added.

The Saudi-Russian move, which is the first such instance of OPEC and non-OPEC cooperation on oil production for 15 years, is also backed by Venezuela and Qatar. Iraq’s oil ministry has come out in favour of the move as well, but is yet to formally clarify its own response.

At 1725 GMT, the Brent front-month oil futures contract was up 7.36% or $2.37 to $34.55 per barrel, while WTI was up 6.44% or $1.87 to $30.91 per barrel.

Meanwhile, precious metals returned to positive turf, albeit marginally. The COMEX front-month gold futures contract was broadly flat at $1,207.90 an ounce, while spot gold was up 0.76% or $9.12 to $1,209.56 an ounce.

COMEX silver rose 0.04% or a cent to $15.34 an ounce, while spot platinum rose 1.81% or $16.85 to $947.30 an ounce. Selected base metal futures were also in positive territory on the London Metal Exchange. At 1635 GMT, three-month futures contracts of tin (up 2.1%), nickel (up 0.5%) and copper (up 0.7%) rose, but lead (down 3.3%) and zinc (down 0.3%) futures posted declines.

Miners predictably cashed in, with Anglo American (up 17.62%) leading the FTSE 100. Furthermore, Deutsche Bank and Credit Suisse lifted their target prices on Anglo's shares following the company full year results.

Glencore (up 16.56%) and Antofagasta (up 8.58%) also posted sizeable gains, with the former benefitting from having secured early refinancing of a $8.45bn loan facility. Tullow Oil (up 10.38%) and Vedanta Resources (up 11.70%) led the FTSE 250 gainers, however Evraz (down 0.79%) slipped lower.

Away from resource stocks, aerospace and defence group Rolls-Royce was on the front foot amid media reports it is considering a bid by activist shareholder ValueAct for a seat on the board.

Auto Trader was a high riser as the company said after a good third quarter it expected full year results to be marginally ahead of current market expectations.

Finally, utility stocks were among the biggest fallers, including National Grid, Centrica, Severn Trent and United Utilities Group.