Market Report: Barclays joins Glencore fan club as it hails rally

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Commodities giant Glencore hit rock bottom in 2015 when investors feared it would become the next Lehman Brothers as its shares collapsed under the weight of sky-high debts and weak metals prices.

But Ivan Glasenberg’s commodities trader and miner has undergone a stark transformation after launching its asset sell-off to appease shareholders.

Glasenberg has since won back fans in the City and today he found Barclays back on his side as it resumed coverage of the company for the first time since November 2015 when the shares were in freefall.

Analyst David Butler, who slapped an overweight rating on the shares and a 390p target price, said Glencore was “much changed” since his last write-up.

“Management’s “never again” balance sheet strategy, the bond redemption programme, the intense scrutiny of the marketing business and the cost-cutting programme at the mine level all mean it is unlikely that we will ever see the tremors of 2015 again when the market questioned the company’s status as a going concern,” Butler said.

Investors responded to the optimism by sending the shares up 6.75p, or 2.3%, to 295.2p to the top of the blue-chip leaderboard, joined by its peers. Anglo American, which pipped Glencore to the Footsie’s wooden spoon in 2015 as worst blue-chip performer of the year, rose 22p to 1157p, continuing last year’s rally.

The FTSE 100 gained 17.99 points to 7228.04 as it was set to continue its incredible rise and finish on the up for the 10th consecutive session.

Insurer RSA was off 9p at 567.5p after UBS downgraded to sell, warning that any special dividends expected as part of its turnaround would be pushed back into 2018.

“We don’t doubt further improvement but we do see a challenge hitting the upside as the turnaround enters a later phase,” the broker said.

Investors headed for the exit at Ashmore Group, which tumbled 19.3p, or 6.5%, to 280p as Barclays warned money was again flooding out of emerging-markets funds. The sell-off comes ahead of a second-quarter update next week.

Iron-ore pellets producer Ferrexpo, which rode the commodities wave last year as it surged more than 500%, rose 5.7p to 135.2p after a decent end to the year for production.

Online trading platform Plus500, which is battling a regulatory crackdown on spread-betters across Europe, was 8p cheaper at 388p after it renewed its shirt sponsorship deal with Atlético Madrid. Accounts for last year revealed Plus500 spent almost $4 million backing the Spanish football club.

Publisher Future was off 0.25p at 13.5p after buying five magazine titles including Classic Rock and Metal Hammer for £800,000 from TeamRock, which went into administration last month.

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January 10, 2017 |
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