Sector movers: Resource stocks take another London hammering

Resource stocks saw a familiar slump on Thursday, following a decline in oil prices and concerns over China’s economic prospects.

The FTSE 100 ended 1.96% or 119.30 points lower at 5954.08, while the FTSE 250 finished 1.56% or 266.76 points lower at 16,792.22. Oil markets endured another bearish session with the WTI front-month futures contract falling to a 12-year low.

At 1657 GMT, WTI was down 0.85% or 29 cents at $33.68 per barrel, having earlier registered a record intra-session decline of 5.5% to $32.10 per barrel; the lowest on file since 29 December 2003. Brent was down 0.41% or 14 cents to $34.09 per barrel, having dropped to $32.16; the lowest on record since April 2004.

Base metal futures also fell across the London Metal Exchange board following further declines in Asia on persistent concerns over China. The country’s purchasing managers’ indices for December, published earlier in the week, failed to impress the market, while heavy declines on the Shanghai Stock Exchange triggered a circuit-breaking halt to proceedings a mere 30 minutes into the trading session.

Unsurprisingly, three-month delivery contracts of copper (down 1.4%), nickel (down 1.0%), lead (down 2.2%), zinc (down 2.5%) and tin (down 0.2%) extended the previous session's losses in late afternoon trading, while primary aluminium futures came in broadly flat.

However, gold futures rallied above $1,100 an ounce level marking a fourth successive session in positive territory this week as investors sought safe havens to park their cash, with the North Korean Hydrogen bomb test adding to existing concerns over stability in the Middle East following a spat between regional heavyweights Saudi Arabia and Iran.

COMEX gold contract for February delivery was up 1.27% or $13.90 to $1,105.80 an ounce, while spot gold was 1.20% or $13.09 higher at $1,106.76 an ounce. Blue chip Randgold Resources (up 1.73%), benefiting from safe haven calls on gold, was only one of three stocks on the FTSE 100 to end the session in positive territory with retailers M&S (up 0.11%) and Next (up 1.09%) being the others.

The story of a largely negative session belonged was once again about the resource stocks slump. Anglo American (down 11.00%) led the fallers, with Glencore (down 8.32%) and Antofagasta (down 5.33%) in close attendance.

FTSE 250 gainers and losers had familiar theme with Acacia Mining (up 3.81%) benefitting from an uptick in gold prices, while the metals and oil price slump dragged Vedanta Resources (down 7.92%) and Amec Foster Wheeler (down 7.19%) lower.

Elsewhere, Aberdeen Asset Management dropped after it went ex-dividend, compounded by the fall in global markets. China’s woes also had an impact on the stock, which revealed in November its full year underlying pre-tax profits were flat due to the slump in Asian and emerging market equities last year.

Home Retail gained on reports that former Tesco boss Sir Terry Leahy and US private equity firm Clayton Dubilier & Rice are reportedly mulling a possible bid to rival Sainsbury’s. Poundland fell after it said that disastrous trading conditions in November continued through the third quarter.

OneSavings Bank rallied after Investec upgraded it from ‘hold’ to ‘buy’, and highlighted the "clear value" in the stock after the shares' 18% fall since mid-December.