Mining Stocks Under Pressure

The US Federal Reserve made its first monetary policy for over a year – a surprise increase of 0.25% in its lending rate to banks to 0.75% – on Thursday. This, in turn, strengthened the dollar against the euro and put pressure on mining stocks on Friday morning due to a softening of metal prices.

Dominic Turner
shareprices.com - Friday, February 19, 2010

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Rio Tinto

In fact, losses in the mining sector offset gains in traditionally defensive stocks such as tobacco and shortly after midday the FTSE 100 index was down 10.04 points or 0.4% at 5,315.05, after closing at its highest level for nearly a month on Thursday.

Anglo American, the largest producer of platinum in the world, reported a significant fall in full-year earnings for 2009 as the recession took its toll on demand for commodities. The firm posted underlying EPS ("Earnings Per Share") of 214¢ for 2009, a fall of 51% compared with the 436¢ posted in 2008, but the results were, nevertheless, better than market expectations. Unlike some of its rivals, including Rio Tinto and Xstrata, who announced the resumption of dividend payments last week, Anglo American declined to do so, preferring to wait until later in the year. At 12:32 GMT, its share price stood at 2,416p, down 86p or 3.44%.

Anglo American was joined on the losers' board by Fresnillo, Randgold Resources and Antofagasta, all of whom were down by between 1.6% and 3.2%, with CMX copper, gold and silver trading down 0.83%, 0.61% and 0.31% respectively on the London Metal Exchange.

 

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