21st Dec 2015 12:05
LONDON (Alliance News) - UK stocks pushed aside any uncertainty caused by the Spanish election outcome and posted broad gains midday Monday, with miners leading the festive season rally.
The FTSE 100 index traded up 0.9% at 6,103.83 points, led by its heavily weighted mining sector, which in turn was helped by a rise in metal prices and by investors looking for a bargain after a terrible 2015 for mining stocks.
"Glencore and Anglo American are at the top of the FTSE leaderboard, which will tell you something about the nature of the rally – with little news expected this week, opportunistic bargain hunting and general festive sentiment will drive any bullish moves that develop over the next few days," said Chris Beauchamp, senior market analyst at IG.
Glencore traded up 8.0% and Anglo American was up 6.5%, but in the year-to-date the two stocks are by far the worst performers in the FTSE 100, down 75% and 71%, respectively.
Glencore and Anglo were joined by fellow miners Rio Tinto, up 3.3%, BHP Billiton, up 3.1%, and Antofagasta, up 3.1%, in the top gainers of the FTSE 100.
BHP's gains were made despite the Sunday Times reporting the company is likely to become the latest big miner to cut its dividend. Citing senior City sources, the report said that plunging oil prices were "almost certain to decide the issue" for the FTSE 100 miner.
BHP would be following Glencore and Anglo American in making the decision to cut its dividend.
Elsewhere on the London Stock Exchange, the mid-cap FTSE 250 index was up 0.4% at 17,173.04 and the AIM All-Share traded up 0.2% at 726.22. In Europe, the French CAC 40 was up 0.5% and the German DAX 30 was up 0.8%.
US futures indicated Wall Street for a higher open as well. The Dow Jones Industrial Average was pointed up 0.8%, while the S&P 500 index and Nasdaq 100 were both indicated up 0.9%.
The outcome of the Spanish general election over the weekend caused some uncertainty before the London open on Monday. The ruling party of Spanish Prime Minister Mariano Rajoy fell short of an absolute majority in elections Sunday that saw both major traditional parties lose ground and left it uncertain who would form the next government.
Rajoy's conservative People's Party emerged as the strongest party in the vote, but lost around a third of its seats and fell well short of the absolute majority it achieved in 2011. Rajoy however said he hopes to continue ruling despite losing the absolute majority.
Though Rajoy said he will try to for a government, he admitted that coalition talks will not be easy, requiring lots of conversation and the hammering out of agreements among parties.
The Socialists also were punished by voters with their worst showing since the return of democracy following the end of the Francisco Franco regime in 1975.
"The Spanish election result is another sign of anti-establishment feeling in Europe brought on by discontent particularly amongst the youth and unemployed which were hit hardest during the 2008 financial crisis," summarised Jasper Lawler, market analyst at CMC Markets.
In UK corporate news, ITV was one of the best performers in the FTSE 100, trading up 3.6% after the Mail on Sunday reported executives from US media giant Comcast are believed to be considering a GBP11.0 billion bid for British broadcaster.
Talks have been held between ITV and Comcast's TV and film arm NBCUniversal, the newspaper report said without citing its source. ITV and NBCUniversal both declined to comment to the Mail on Sunday, it said.
Associated British Foods traded down 1.7% at 3,269.00 pence after RBC Capital downgraded the owner of discount fashion retailer Primark and of British Sugar to Underperform from Sector Perform, and lowered its price target on the stock to 3,000p from 3,700p.
RBC said AB Foods has a strong management team but the company faces cost and currency headwinds, and it thinks Primark's longer-term profit pool may be constrained by a lack of online exposure.
Tullow Oil was benefiting from an upgrade to Outperform from Sector Perform from RBC, which said it expects Tullow to extend its asset-backed debt facilities in the first half of 2016, enabling investors to re-focus on the potential of those assets.
However, the bank cut its price target on the stock to 260.00p from 400.00p. Tullow traded up 3.5% at 160.492p.
Precious metal miners were amongst the best mid-cap performers as the price of gold continued to make gains. At midday, the metal traded at USD1,071.82 an ounce compared to USD1,065.60 an ounce at the London equities close on Friday. Acacia Mining traded up 4.0%, Polymetal International was up 3.9% and Centamin up 3.7%.
Weatherly International was one of the best performers in the AIM All-Share up 28%. The copper mining company, which operates in Namibia, said the deferral in commencing repayments of debt under its Tranche B facility with Orion Mine Finance (Master) Fund I LP has been made formal.
The first repayment under the facility is now due in May 2016, Weatherly International said, followed by quarterly repayments until February 29, 2020. In addition, the amended agreement with Orion provides a further Tranche D facility of USD4.0 million to the AIM-listed copper mining company operating in Namibia in southern Africa.
Gable Holdings traded down 26% after the European non-life insurer agreed funding arrangements so its Gable Insurance subsidiary meets the initial capital requirements under new Solvency II insurance rules governing capital set to come into force across the EU from January 1, 2016.
The funding arrangements comprise a combination of quota share reinsurance and the issue of a new convertible loan note instrument under which Gable has raised about GBP4.0 million. The quota share arrangement is designed to take at least GBP15.0 million of gross written premium off the 2015 Gable Insurance income statement together with associated insurance profit.
Still ahead in the corporate calendar, the Chicago Federal Reserve national activity survey index is at 1330 GMT, and the preliminary reading of eurozone consumer confidence is at 1500 GMT.
By Neil Thakrar; [email protected]; @NeilThakrar1
Copyright 2015 Alliance News Limited. All Rights Reserved.
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