30th May 2014 09:44
LONDON (Alliance News) - UK stocks trade mixed Friday, with the FTSE 100 struggling to add to its recent strong gains, as it is weighed down by some of its mining constituents.
By mid-morning, the FTSE 100 is almost perfectly flat at 6,871.2, the FTSE 250 is up 0.3% at 16,009.16, and the AIM All-Share index is down 0.1% at 810.55.
It is a similar story in Europe, where the CAC 40 in Paris is down 0.3%, while the DAX 30 in Frankfurt is up 0.2%.
"A fresh record high for the S&P 500 has failed to enthuse London markets, as some worrying news from China sent miners lower. Government figures indicated manufacturing growth was weakening, contradicting recent signs of improvement in the economy and providing an excuse for some selling in raw materials," says Chris Beauchamp, a market analyst at IG.
Mining giants Anglo American, down 3.1%, Rio Tinto, down 2.9%, and BHP Billiton, down 2.1%, are currently three of the biggest fallers in the blue-chip index.
Meanwhile, Fresnillo and Randgold Resources, down 2.8% and 1.4% respectively, have been hit by the recent weakness in the price of gold. The precious metal has fallen by approximately 3% in the last four days, and currently trades near a multi-month low at USD1,253.
The FTSE 350 mining sector index is currently down 1.9%, making it the biggest declining sector.
Polymer products maker Fenner is the biggest loser in the FTSE 250, down 12%. Shares in the company have plummeted after it warned that its underlying pretax profit for the current financial year will come in 10% to 15% below the consensus estimate of GBP77.6 million.
It said trading conditions in the US coal market have deteriorated and are showing no signs of imminent improvement, and its Australian Engineered Conveyor Solutions arm failed to secure a contract, which it had previously expected to deliver during the final quarter.
"These are clearly disappointing developments and demonstrate the continued challenging environment in its mining end markets," said Numis Securities analyst Scott Cagehin. Numis has downgraded Fenner to Hold from Add following the announcement.
Vedanta Resources, down 2.6%, is the index's second heaviest faller. The group has seen hundreds of marchers protest outside its offices in Zambia after Chairman Anil Agarwal made comments online about how the company has made up to USD1 billion every year for nearly a decade from its Konkola Copper Mines subsidiary, This is Money reported Thursday.
According to This is Money, which is part of the Daily Mail group, the comments have reignited a row about whether London miners are paying their fair share in tax.
In the FTSE 100, Smith & Nephew is once again a big riser. The medical technology company, which closed as the blue-chip index's biggest gainer on both Wednesday and Thursday, continues to benefit from merger and acquisition speculation.
On Wednesday, the Financial Times published an article that suggested that Stryker, a US maker of hip implants and knee replacements, was about to make an unquantified takeover bid for the company. Stryker was quick to deny the rumours, but Smith & Nephew's shares have continued to benefit from the speculation.
UBS has raised Smith & Nephew's price target to 1,100.00 pence from 1,000.00p Friday, adding it to its M&A watch list, saying that it assumes a one-in-three chance that the group will be acquired in the next two years.
"Forex trading shows little real moves on the forex majors with the exception of sterling which has made early gains against the dollar, whilst the yen is also showing some strength," says Richard Perry, a market analyst at Hantec Markets.
The Japanese yen rose against its major competitors overnight after the country's consumer price inflation advanced in April, diminishing chances for further easing by the Bank of Japan.
Nationwide core inflation in Japan was up 3.2% on year in April, the Ministry of Internal Affairs and Communications said. That topped forecasts for 3.1% and was up sharply from 1.3% in March. Overall nationwide CPI rose 3.4% - in line with expectations and up from 1.6% in the previous month. On a monthly basis, core CPI was up 2.2% and overall inflation added 2.1%.
However, the currency has pared some of its early gains.
By mid-morning, the pound trades at USD1.6735, EUR1.2290, CHF1.5002, and JPY170.070. The dollar and the euro trade at JPY101.637 and JPY138.358, respectively.
Still to come in the data calendar Friday, US personal income and personal spending numbers are published at 1330 BST. The Chicago purchasing managers' index is released at 1445 BST, with the Reuters/University of Michigan consumer sentiment index at 1455 BST.
Richmond Federal Reserve Bank President Jeffrey Lacker gives a speech at 1900 BST. Federal Open Market Committee member John Williams and the Federal Reserve Bank of Philadelphia's President Charles Plosser both speak at 2200 BST.
Ahead of the data, US futures trading currently indicates that stocks on Wall Street will open slightly lower, with the DJIA and NASDAQ Composite called to open down 0.1%, and the S&P 500, which closed at a record high on Thursday, called to open down 0.2%.
By James Kemp; [email protected]; @jamespkemp
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
Anglo AmericanSmith & NephewRio TintoFenner PLCVedanta ResourcesRandgold ResourcesFresnilloBHP Group