FTSE Climbs to Two Month High
The FTSE 100 climbed to a two month high on Wednesday, helped by strength in the oil sector as well as gains amongst precious metals miners. The UK’s leading index closed up by 0.3 percent as thin trading volumes still helped the index to climb to its highest closing level since mid-October.
Oil companies were the best performers of the day, with BP up by 1.3 percent; the biggest contributor to the index in terms of points. The energy sector was strong because the dollar’s rally has (at least temporarily) stopped, and there is fresh optimism that crude oil producers will come together to limit their output.
The lower dollar helped to lift gold prices as well, which boosted shares in Randgold Resources (up 2.5 percent) and Fresnillo (up 2.8 percent). The rest of the mining sector, however, was weak. The price of copper fell to a one month low after Chinese metal imports fell sharply. China is the biggest consumer of basic materials in the world, so low demand there severely affects the companies that they trade with.
Some of the mining stocks have out-done the bounce in the price of metals, having recovered from significant lows earlier this year, but mining firms are being exposed to a lot of weakness heading into 2017. If metals demand does not recover soon, or supply does not contract, then there are several companies in the FTSE 100 that are going to suffer heavily in the coming months.