Market Report: Investors hope for mining sector recovery

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Investors took a punt on mining stocks, with some speculating that the worst is over for the battered sector.

Last week’s hammering dragged trading-cum-mining giant Glencore back below £1 a share. It recovered 4.11p today to 97.22p even as the price of copper slipped to six-year lows.

Broker Jefferies remains unconvinced about the Glencore investment proposition with its towering debt pile casting a shadow over the balance sheet, even after a string of asset sales.

“There is risk that further weakness in commodity prices offsets the benefit of a better balance sheet and strong trading,” said analyst Christopher LaFemina, who cut his target price to 100p.

Anglo American, the Footsie’s second-biggest faller of 2015 behind only Glencore, was also the source of some City bargain-hunting, rising 7.4p to 463.6p after last week’s 13% slide.

Meanwhile, Anglo-Aussie iron ore giants BHP Billiton and Rio Tinto moved higher, up 24.4p to 907.8p and 42p to 2286p, while a rise from Brent crude helped Shell up 29.5p to 1611.5p and BP up 5.8p to 370.3p.

Friday’s terror attacks in Paris knocked travel and leisure stocks but pushed investors towards safe-haven assets such as gold, whose spot price gained 11.4 cents to $1092.2 an ounce.

The precious metals rise boosted Mexican silver miner Fresnillo by 4.5p to 677.5p and gold producer Randgold Resources by 57p to 4008p.

The City shrugged off early losses to nudge the FTSE 100 up 15.98 points to 6134.26.

Troubled Rolls-Royce was among the winners, 17p higher at 530.5p, as investors sniffed out a bargain after last week’s pounding for the aircraft engines maker. Goldman Sachs removed its 966p target price, replacing it with a 711p target.

Restaurant Group, 28p cheaper at 633p, was the heaviest faller on the mid-cap index as Nomura cut its rating to reduce, sparking concerns about the Frankie & Benny’s owner’s ability to deal with the National Living Wage from next year.

Tullow Oil gushed 11.7p higher to 196p after analysts at UBS upgraded the oil firm to buy, arguing that it has gone from “survivor to thriver”.

Parcels delivery firm DX Group edged up 1p to 24p after Friday’s profit warning that triggered a 73% share price fall with broker downgrades coming thick and fast.

Three weeks after lifting its target price to 115p, Cantor Fitzgerald slashed it to 26p, fearing “these troubles may endure”.

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November 16, 2015 |
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