9th Oct 2015 16:10
LONDON (Alliance News) - UK equities closed up on Friday in a positive response to doveish minutes from the US Federal Reserve, helping the FTSE 100 to cement a notable weekly gain on the back of a strong showing by mining stocks.
London's blue chip index closed the day up 0.7% at 6,416.16, stretching its run of daily gains to eight successive sessions and closing the week up 4.7%. The FTSE 250 index closed up 0.5% at 17,085.92 and the AIM All-Share closed up 0.4% at 736.10.
However, some of the FTSE 100's gains were lost towards the close as the price of oil fell off its intraday highs. Brent oil had traded at USD54.02 a barrel at one stage in the day, but at the London close it was quoted at USD52.51 a barrel.
In Europe, the CAC 40 in Paris closed up 0.5% and the DAX 30 ended up 1.0%. On Wall Street at the London close, the Dow Jones Industrial Average was up 0.3%, the S&P 500 up 0.2%, and the Nasdaq Composite up 0.5%.
The pound was 0.1% higher against the dollar since the close on Thursday at USD1.5311. The euro traded 0.8% higher against the dollar since the European equity close on Thursday at USD1.1365.
The FTSE 100 opened strongly on Friday after Fed minutes late Thursday showed Federal Open Market Committee members were concerned about global growth risks and decided it was prudent to wait for additional information before raising interest rates. Combined with the recent US jobs report, which came in below forecasts, the minutes helped reinforce the view that the Fed will not raise rates later this month and may delay its first rate hike into next year.
"Admittedly, there are still two employment reports scheduled for release before the FOMC meets in December," Paul Ashworth, chief US economist at Capital Economics, said. "But at this stage we think it would take a major turnaround in payroll growth, to well above 200,000 per month, to persuade officials to support a December rate hike."
Miners led the list of gainers in the FTSE 100 as they had done regularly throughout the week. The FTSE 350 Mining sector index closed up 4.4% on the day and 19% over the course of the week.
Glencore ended up 8.6% as the best performer in the index after the multi-commodities miner and trading house announced a 500,000 tonne per year reduction of contained zinc metal mine production across its operations in Australia, South America and Kazakhstan, in order to preserve the value of its reserves in the ground "at a time of low zinc and lead prices".
This represents around a third of Glencore's annual zinc production, it said, and will reduce fourth quarter 2015 mine production by around 100,000 tonnes of contained zinc metal. The company will suspend its operations at Lady Loretta in Australia and at Isaycruz in Peru, and will reduce operations at George Fisher and McArthur River in Australia, as well as various mine operations in Kazakhstan.
Fellow multi-commodity miner Anglo American ended up 6.9% and precious metals miner Fresnillo closed up 4.3%. The price of gold rose 1.2% since the close on Thursday to USD1,157.80 an ounce after a the doveish Fed minutes pushed the dollar lower and supported commodities prices.
Standard Chartered was another of the top blue-chip performers closing up 4.7%. The emerging markets bank's Chief Executive Bill Winters plans to cut about 1,000 jobs worldwide, according to media reports. Winters has pledged to improve returns at the bank, which has suffered from declining profit in the past two years.
In a statement, Standard Chartered said it has already acted to reduce management layers, meaning it will have up to 25% fewer senior staff.
Sports Direct International closed down 6.6% as investors reacting negatively to its announcement on Thursday that it is planning a multi-million investment in the Heatons store portfolio, one day after revealing the EUR47.5 million acquisition of the Irish clothing retailer.
In addition, the Guardian reported on Friday that Sports Direct Chief Executive David Forsey has been charged with a criminal offence relating to the group's controversial pre-pack administration of its fashion retailer USC.
The Guardian reported that Forsey is accused of failing to notify authorities of plans to lay off warehouse staff in Scotland, around 200 of whom were given just 15 minutes' notice by the administrator in January that they were losing their jobs.
In the FTSE 250, Al Noor Hospitals Group confirmed it has received an approach from fellow FTSE 250 UAE healthcare operator NMC Health regarding a possible takeover offer just days after Al Noor said it was in talks with South African private hospital group Mediclinic International Ltd about a possible reverse takeover.
Under the UK Takeover Code, NMC is now required to either announce a firm intention to make an offer by November 6, or walk away. NMC separately Friday confirmed it had made an approach about a possible cash and share offer for Al Noor. Al Noor shares closed up 0.5%, while NMC shares fell 3.0% to make it one of the worst midcap performers.
Vedanta Resources closed up 12% after the multi-commodity company reported a rise in production across most of its commodities in the first half of its financial year and said its net debt is expected to be below the USD8.0 billion mark as of the end of September.
Vedanta said it was focused on optimising its operating expenses and capital expenses in light of current market conditions, and it implemented several initiatives to generate cash savings across its business during the second quarter. This has resulted in improved cost performance and lower net debt, the company said.
Oil engineering and service company Petrofac rose 9.7% after it said it has terminated its contract with ZPMC, the Chinese company that was constructing the Petrofac JSD 6000 deepwater multi-purpose offshore vessel, over issues with ZPMC's performance in respect of the construction.
The contract was awarded to ZPMC back in 2014, and the vessel was expected to be constructed and installed sometime in early 2017. The move may lead to Petrofac abandoning its plans to construct the new vessel, marking another strategic reversal, but "not an unpopular one", according to Investec analyst Neill Morton.
If Petrofac does abandon the new vessel, it would "bring the company full circle", back to its roots as an onshore, MENA-focused engineering and construction contractor, Morton said.
In the economic calendar on Monday, French current account data is at 0745 BST and UK Conference Board leading economic indicators index is at 1430 BST. There are also speeches from US Federal Reserve members with Atlanta President Dennis Lockhart speaking at 1310 BST and Chicago President Charles Evans at 1530 BST.
In the UK corporate calendar Jupiter Fund Management issue a third quarter trading statement, while manufacturer of infection prevention, contamination control and hygiene products Tristel reports full-year results and regenerative medical devices company Tissue Regenix Group reports interim results.
By Neil Thakrar; [email protected]; @NeilThakrar1
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