Iron ore worries put a dent in miners

27 Mar 2017

Miners were under pressure yesterday as investors continued to digest news out of China signalling a decline in demand for steel. The price of the most traded iron ore on the Dalian Commodity Exchange fell 1.9pc, continuing the 16pc slump seen the previous day when it dropped to a two-month low.

Traders sold off commodity groups in reaction, with Glencore retreating 7.9p to 321.7p, Rio Tinto down 43p to £32.67 and BHP Billiton off 16.5p at £12.55, while Anglo-American fell 11.5p to £12.54. China is the largest consumer of iron ore with its giant steel industry producing more than half of the 1.6bn tonnes of steel produced globally each year.

Closer to home, markets seemed to shrug off concerns about the previous day’s terror attacks in Westminster, with the FTSE 100 closing up 0.22pc at 7,340.71, ending a two-day losing streak. The FTSE 250 – which is more representative of UK companies – put in a better performance, up 0.9pc to 19,002.27.

Topping the blue-chip index was fashion retailer Next, up 314p to £41.99, despite reporting a drop in underlying profits. However, it held its forecasts and investors jumped aboard in relief, despite the company warning of “another tough year” on expectations inflation will squeeze consumer spending.

Despite Next’s downbeat assessment, official retail sales figures were better than expected, up 1.3pc, and this helped high street stalwart Marks & Spencer, which added 12.4p to 337.3p. Tesco rose 3.75p to 189.6p.

Not faring so well was Kingfisher, the company behind DIY retailer B&Q. Having used its annual results the previous day to warn of “uncertainty”, news which sent its shares down 5.1pc, the slide continued, falling 5.3p to 322.7p yesterday.

In the wake of the numbers, which set out progress on the first year of a five-year transformation plan, Investec yesterday cut its rating on Kingfisher to “sell”. “It is still early days and the results gave no further clues as to whether the strategy will work,” said analyst Kate Calvert. “What was more apparent is the weak competitive positions of both its French and B&Q businesses and the enormity of the transformation ahead.”

Climbing higher were airline operators as concerns about Brexit meaning they could lose the ability to fly freely between European destinations once Britain leaves the bloc eased. Travel group TUI rose 30p to £11.23, easyJet gained 23p to £10.08 and British Airway-owner IAG put on 1.5p to 546.5p.

Safety and medical company Halma topped the mid-cappers, rising 62.5p to £10.22 after a positive trading update revealing strong orders, earning it its biggest one-day gain since November 2015.

Source – telegraph.co.uk