Sector movers: Supermarket, metal shares drag London market lower

Supermarkets and selected retail stocks joined metal companies in dragging the London market lower on Friday.

The FTSE 100 fell 0.62% or 38.05 points to 6,117.76, while the FTSE 250 was down 0.30% or 51.66 points at 16,968.40, as supermarket stocks were pulled lower by WM Morrison (down 3.34%), which continued to fall after reporting a slump in first-half pre-tax profits on Thursday, and the sale of its convenience stores arm.

Rivals Sainsbury (down 2.30%) and Tesco (down 2.26%) also among the session’s biggest blue chip fallers. Continuing with retail, Associated British Foods, owner of the Primark discount clothing chain, was down after a warning earlier this week that falling sugar prices would hit profits.

Communications stocks ended the week lower with BT (down 2.19%) and Inmarsat (down 2.48%) in negative territory. However, mining stocks posted modest gains on hopes of a Chinese government stimulus with Rio Tinto, Anglo American, BHP Billiton and Glencore leading the way.

A report from state news agency Xinhua said Beijing is considering injecting more than 1 trillion yuan into the economy over the next three years. Rio Tinto (up 0.76%) was also given a boost after UBS upgraded the stock to ‘buy’ from ‘neutral’ with an unchanged price target of 2,850p.

However, as base metal futures sent mixed signals on the London Metal Exchange yet again, midcap metal stocks continued to struggle. Past the midway point of trading on the LME, three-month delivery contracts of primary aluminium (up 0.5%) and tin (up 1.2%) were in positive territory. However, copper (down 0.9%), lead (down 0.9%), nickel (down 1.2%) and zinc (down 0.9%) were in all negative territory.

Precious metals remained in negative territory as well. At 1439 BST, COMEX gold for December delivery was down 0.48% or $5.30 at $1,104, while spot gold was down 0.86% or $9.55 at $1,101.20 an ounce. Elsewhere, COMEX silver was down 0.85% or 12 cents to $14.52 an ounce, while spot platinum was down 1.67% or $16.40 to $964.38 an ounce.

Lonmin (down 3.79%) and Centamin (down 3.61%) ended up among the biggest FTSE 250 fallers. Meanwhile, oil benchmarks endured another volatile session in Asia, extending declines late into afternoon trading in Europe. An IEA report predicting a decline in non-OPEC, particularly US output, failed to halt the price slide.

The agency expects US oil production to drop by 0.4m barrels per day (bpd) in 2016 versus a growth of 1.7m bpd in 2014. At 1447 BST, the Brent front month futures contract was down 2.56% or $1.25 to $47.64 per barrel, having registered losses for much of the Asian session. WTI futures, down 2.70% or $1.24 to $44.68, narrated a similar tale of woe.

Invariably, both blue oil and gas chips – BP and Shell – ended the session lower, along with a plethora of mid to small cap stocks. Ophir Energy (down 4.81%) and Premier Oil (down 2.83%) came worst off among the midcaps.