Commodity turnaround and BHP Billiton bid drags FTSE lower
The UK’s blue-chip index is losing ground this morning with the FTSE 100’s biggest stocks, namely bankers and miners, posting losses on the back of ongoing doubt about the global economic recovery. BHP Billiton (LON:BLT) is one of those mining stocks dipping into the red this morning after making a £25bn bid for Canadian fertiliser firm Potash.
Kate Neilson
shareprices.com - Wednesday, August 18, 2010
Banking stocks, which showed mild signs of rebounds in the previous session, are once again subject to investor aversion as price gains yesterday have made them less of a bargain option in the midst of global economy fears sparked by a raft of poor GDP data releases from the UK, US, China and most recently Japan.
HSBC Holdings (LON:HSBA) is the banking group making the biggest losses. The share price has plunged almost 10p, losing 1.5 per cent. Standard Chartered (LON:STAN) and Royal Bank of Scotland (LON:RBS) are making share price losses of 0.5 and 0.3 per cent respectively. And as a whole the banking sector is down 0.7 per cent as investors fear a growth in bad debts as the recovery shows a slowdown in momentum.
Away from banks, miners are having an equally traumatic time of it today as well.
The stock hitting headlines in report today is BHP Billiton. The heavyweight miner launched a hostile takeover bid for Potash, the world’s biggest fertiliser producer, according to reports following a failed bid that was rendered “grossly inadequate” by the fertiliser company.
Investors and current shareholders appear to be concerned as to how the mining giant will fund the deal, especially in a time of uncertainty with metal demand. The move has seen the miner’s stock fall by one per cent, shedding 18.5p on the report.
BHP hasn’t been helped by weaker metal prices which have crippled the rest of the sector on the London Stock Exchange today.
Eurasian Natural Resources (LON:ENRC), the strongest blue-chip gainer 24 hours ago, has shed much of the gains acquired yesterday, dropping to 945p with a loss of 23p – or 2.4 per cent.
Fresnillo (LON:FRES), Anglo American (LON:AAL), Vedanta Resources (LON:VED) and Lonmin (LON:LMI) are also declining at the rate of between two and 0.8 per cent.
Along with weak metal prices, crude prices dropped to hurt energy stocks, too. BP (LON:BP), Royal Dutch Shell (LON:RDSA) and Tullow Oil (LON:TLW) are all amongst the biggest fallers on the FTSE this morning, losing between 1.3 and 0.6 per cent.
The biggest gainer on a general down FTSE today is Intertek Group (LON:ITRK). The testing equipment company is set to be added to the MSCI Inc World Stock Index, pushing a fresh wave of tracker funds into the stock. The share price has leapt five per cent on the news.
Britain’s top index is down 30 points at 10:30BST, losing 0.6 per cent to drop to 5,320.
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