21st Jul 2015 09:46
LONDON (Alliance News) - London share prices are mixed Tuesday morning, as mining stocks push higher, rebounding after declines in commodity prices dragged down stocks across the sector Monday, while AO World leads the FTSE 250 after the online white goods retailer reported it is on track with its expansion plans.
The blue chip-index is down 0.1% at 6,780.35 points, while the mid-cap FTSE 250 is up 0.1% at 17,797.91 and the AIM All-Share is up 0.2% at 759.11.
In Europe, the CAC 40 in Paris is down 0.2%, and the DAX 30 in Frankfurt is down 0.1%.
Gold is slightly higher on the day Tuesday at USD1,108.98 per ounce. The price of gold has recovered after slumping Monday morning to USD1,073.40 an ounce, a level it hasn't seen since early 2010. The precious metal traded at USD1,144.17 an ounce on Friday before its recent sell-off.
London-listed miners Fresnillo, up 2.5%, Randgold Resources, up 1.4%, Antofagasta, up 0.8%, and Glencore, up 0.5%, are amongst the best blue-chip performers. In the FTSE 250, KAZ minerals is up 2.5% and Acacia Mining is up 1.9%.
The decline in the gold price came amid speculation that the Federal Reserve will hike US interest rates as soon as September. Fed Chair Janet Yellen told Congress last week that the economy is improving at a pace that should allow the central bank to begin normalizing rates by the year's end.
Also weighing on gold prices Monday was the disclosure of lower-than-expected gold reserves held by China. The People's Bank of China on Friday said gold reserves in the country reached a record 1,658 tons as of June 2015, up nearly 60% from 1,054 tons in April 2009. However, the surge was below analysts' expectations, dragging gold prices down sharply as Chinese holders sold big quantities of the precious metal in the Asian session.
Outside miners, general insurers Admiral Group, up 2.6%, and RSA Insurance Group, up 1.0%, are higher after roadside assistance company AA found that car and home insurance premiums are set to rise due to an upcoming increase in the UK's insurance premium tax. AA said it thinks premiums may rise due to the decision by the UK government to increase the standard rate of insurance premium tax to 9.5% from 6%.
Meanwhile, shares in brewing giant SABMiller are up 1.0% at 3,529.5 pence after Nomura upgraded it to Buy from Neutral, lifting its price target to 4,000p from 3,000p.
"We think the business could look quite different following the appointment of a heavyweight chairman and new chief financial officer at the AGM on 23 July," writes Nomura. "We see potential for the company to rediscover its entrepreneurial spirit and expect organic beer volume growth to renew in financial year 2016 to 3.8%."
In the FTSE 250, AO World is the biggest gainer, up 9.2%, after it said it is on track with its long-term strategic process as it continues to build brand awareness and plans to expand its services in Europe.
The online domestic appliances retailer said that sales continue to "build satisfactorily" in Germany, where it has entered into a ten-year lease for a new European distribution facility in Bergheim near Cologne, expecting to take occupation during the first half of the financial year 2017. The property will replace two of its existing sites and will facilitate expansion into countries surrounding Germany, the company said.
In the UK, AO World said revenue grew 6.5% in the three months to June 30, with orders up 13.9%, while AO.com experienced revenue growth of 11.2%. It said it had a strong start to trading in July and is encouraged by the indications of growth in housing transactions and disposable income in the broader market.
Shares in specialty chemicals company Croda International are up 3.9% after Croda said its pretax profit rose in the first half of 2015 on the back of better revenue across its operations, prompting it to hike its interim payout. The company said its pretax profit for the six months to June 30 was GBP135.6 million, up from GBP125.1 million a year earlier.
IG Group Holdings, down 6.0%, said it is seeking a new chief executive as Tim Howkins is set to retire after nearly nine years in the role and 16 at the group as a whole. The spread betting and contracts-for-difference company, which gives retail traders access to financial markets, said Howkins is to step down at its annual meeting of shareholders in October.
Peter Hetherington, currently the group's chief operating officer, has put himself forward to replace Howkins, who served as chief financial officer before he was chief executive, and will take the top job on an interim basis until a permanent successor is confirmed.
Outside UK company news, UK public sector net borrowing decreased in June from last year, the Office for National Statistics said. Excluding public sector banks, PSNB dropped GBP0.8 billion to GBP9.4 billion in June. It was equivalent to 0.5% of gross domestic product. The decline in net borrowing was resulted from an increase of GBP0.1 billion in central government net borrowing being more than offset by a decrease of GBP1 billion in local government net borrowing.
In the rest of a very light corporate calendar Tuesday remains the US Redbook index, due at 1355 BST.
By Daniel Ruiz; [email protected]
Copyright 2015 Alliance News Limited. All Rights Reserved.
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AdmiralKAZ.LIGRandgold ResourcesACA.LRSA.LFresnilloGlencoreCroda InternationalAo WorldSAB.L