Sector Movers: Finance stocks slip, as miners head higher

At the close of proceedings, the FTSE 100 ended 0.27% or 17.03 points lower at 6182.40, but the FTSE 250 ended 0.59% or 99.76 points lower at 16,831.43. Oil futures began the week on positive turf, with Brent and WTI futures posting gains for much of the European session.

At 1629 GMT, focus remained on oil market fundamentals and in favour of a supply correction, as the Brent front month futures contract rose 3.41% or $1.32 to $40.04 per barrel, while the WTI rose 3.40% or $1.22 to $37.14 per barrel.

In a note to clients, Fitch Ratings said major European oil companies will not be able to balance cash inflows and outflows in 2016 under its oil price expectations, resulting in higher net debt and a further sharp deterioration in credit metrics.

The ratings agency assumes Brent to average $35 per barrel in 2016, before recovering to $45 per barrel in 2017, $55 per barrel in 2018 and $65 per barrel in the long-term.

Last week, the International Energy Agency noted that US oil production had fallen by about 25,000 barrels per day to just over 9m bpd, down from a peak of 9.6m bpd in April, soothing concerns about a supply glut.

Away from oil markets, precious metals saw mixed trading. The COMEX front-month gold futures contract was marginally down by 0.28% or $3.60 at $1,267.10 an ounce, while spot gold was up 0.54% or $6.80 to $1,265.75 an ounce.

COMEX silver fell 0.22% or three cents to $15.66 an ounce, while spot platinum rose 2.34% or $22.86 to $1,001.66 an ounce; a jump above the psychological $1,000-level for the first time since October 2015.

Headline base metal futures were largely higher across the London Metal Exchange board, as the Chinese National Peoples’ Congress met over the weekend, issuing comments interpreted as positive for the commodities market.

At 1635 GMT, three-month futures contracts of primary aluminium (+0.8%), nickel (+1.0%), lead (+1.5%), tin (+1.8%), and copper (+0.5%) headed upwards, with the latter just short of the psychological $5,000/t level, which it had breached over the previous session. However, zinc (-1.6%) futures strayed away from the market direction and headed lower.

Unsurprisingly, Antofagasta (+7.63%), Glencore (+6.72%), Anglo American (+6.10%) and Rio Tinto (+5.02%) led the FTSE 100 higher. Among the midcaps, Evraz (+11.54%), Polymetal International (+4.35%) and Vedanta Resources (+3.42%) were on FTSE 250’s biggest gainers’ rosters.

Away from resource stocks, the story of the session belonged to Old Mutual (+6.90%), amid reports that it was planning a £9bn split into numerous standalone companies, which could lead to a takeover battle for some of its biggest operations.

The company responded to reports by saying that “all options for the strategic review are being considered, but no decision has yet been made”.

However, finance and banking stocks were generally lower. Jupiter Fund Management (-2.86%), Worldpay (-2.73%), RSA Insurance (-2.03%), and Provident Financial (-1.90%) were among the biggest fallers.

Elsewhere, Standard Chartered was under the cosh after Moody’s downgraded its rating on the emerging markets-focused bank’s long-term debt by one notch to Aa2. It pointed to expectations the lender’s profitability would remain weak over the next two years and the challenging environment in some of the markets in which it operates.

Finally, Randgold Resources (-3.02%) ended up as the session’s biggest FTSE 100 faller after Morgan Stanley cut its rating on the stock to ‘equalweight’ from ‘overweight’. The bank noted Randgold’s shares are up 53% year-to-date and said it was time to take profits.