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| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London close: Copper-price fall hammers miners as FTSE 100 drops 2.4% A plunge in the price of copper and a tumble across the heavyweight mining sector resulted in a sharp sell-off in London on Wednesday, as investors showed concerns about the global economic outlook. "It has turned into a very ugly day for the London market, as a confluence of bad news provided the spark for heavy selling across the board," said analyst Chris Beauchamp from IG.
The FTSE 100 finished the session down 2.4% at 6,388.
Beauchamp said there was "carnage" in the UK mining sector as risk appetite was scaled back following a growth forecast downgrade at the World Bank, weak US retail sales data and underwhelming results from US banking group JPMorgan Chase & Co.
Copper prices slumped nearly 6% to a low of $5.353.25 a metric tonnes, falling to its lowest since mid-2009, after the World Bank slashed its growth forecasts for the global economy for this year to 3% from 3.4% previously. Next year's estimates were also lowered with "risks to the outlook remain tilted to the downside".
Meanwhile, although the recent slide in oil prices eased, Brent crude still fell 0.5% at $46.34 a barrel after US government data showed that oil stockpiles Stateside increased to a six-month high last week.
Despite the sell-off across equity markets across Europe, hopes for quantitative easing (QE) in the Eurozone were boosted ahead of the European Central Bank's (ECB) policy meeting next week after ECB president Mario Draghi was quoted as saying that he is ready to buy government bonds. In an interview with German newspaper Die Zeit, Draghi said that loose monetary policy is needed to achieve price stability in the Eurozone.
A leading lawyer at the European Court of Justice claimed that outright monetary transactions were compatible with EU law as long as certain conditions are met, which some economists said effectively gave the green light to full-blown QE by the ECB.
Mining stocks tumble across the board
Mining stocks dropped sharply on Wednesday, though those with copper operations suffered the worst, such as Glencore, Anglo American, BHP Billiton, Antofagasta, Kaz Minerals and Vedanta Resources. Glencore, in particular, fell over 9% to a record-low.
Oil and gas stocks were also in the red, such as BP, Shell, BG Group, Afren and Tullow Oil.
Nevertheless, the standout faller of the day was Game Digital which dropped over 30% after delivering a profit warning. The video-games and console retailer said that full-year profits would be "broadly in line" with last year after a "highly competitive" Christmas.
Tesco was one of the few risers on the FTSE 100 after activist investor Bill Ackman reportedly said that he had considered buying a stake in the firm. Investors were shrugging off the news that S&P has followed in the footsteps of fellow ratings agency Moody's by cutting its rating on the supermarket's debt to 'junk'.
Burberry was slightly lower despite saying that reported retail sales growth accelerated strongly in the third quarter, though it highlighted a slowdown in the high-margin market of Hong Kong. The high-end luxury fashion group said retail revenues totalled £604m in the three months to 31 December, up 14% on last year.
Fashion retailer Supergroup surged after strong Christmas trading performance underpinned its full-year profit guidance. Like-for-like sales grew by 12.4% in the 11 weeks to 10 January. |
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| | Market Movers
techMARK 2,959.33 -1.14%
FTSE 100 6,388.46 -2.35%
FTSE 250 15,872.09 -1.32%
FTSE 100 - Risers
Royal Mail (RMG) 434.30p +1.47%
Tesco (TSCO) 214.00p +0.94%
Hammerson (HMSO) 631.00p +0.64%
BT Group (BT.A) 401.40p +0.40%
Aviva (AV.) 491.40p +0.12%
FTSE 100 - Fallers
Glencore (GLEN) 244.00p -9.28%
Anglo American (AAL) 1,042.50p -8.99%
Coca-Cola HBC AG (CDI) (CCH) 1,069.00p -6.06%
BHP Billiton (BLT) 1,285.00p -5.31%
Intertek Group (ITRK) 2,244.00p -5.04%
Weir Group (WEIR) 1,608.00p -4.96%
Standard Chartered (STAN) 886.10p -4.88%
Antofagasta (ANTO) 675.00p -4.80%
Ashtead Group (AHT) 1,033.00p -4.70%
Hargreaves Lansdown (HL.) 914.50p -4.54%
FTSE 250 - Risers
Supergroup (SGP) 896.00p +10.41%
IP Group (IPO) 227.00p +4.22%
Elementis (ELM) 287.50p +3.83%
Saga (SAGA) 160.90p +3.81%
Just Eat (JE.) 340.80p +3.43%
Dignity (DTY) 1,850.00p +3.41%
Big Yellow Group (BYG) 618.50p +2.74%
Nostrum Oil & Gas (NOG) 441.40p +2.65%
Allied Minds (ALM) 380.00p +1.88%
Debenhams (DEB) 71.30p +1.86%
FTSE 250 - Fallers
Game Digital (GMD) 242.00p -30.46%
Kaz Minerals (KAZ) 170.40p -26.07%
Afren (AFR) 21.74p -16.03%
Vedanta Resources (VED) 408.20p -15.90%
Infinis Energy (INFI) 188.40p -8.85%
Entertainment One Limited (ETO) 279.00p -6.12%
Grainger (GRI) 184.00p -5.40%
Vesuvius (VSVS) 430.30p -5.26%
BlackRock World Mining Trust (BRWM) 298.20p -5.18%
Polymetal International (POLY) 539.50p -4.85% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks slide on global growth concerns, drop in commodities, disappointing data European stocks declined after the World Bank downgraded its global growth forecasts, citing weakness in Europe and China.
The World Bank expects global growth of 3% this year and 3.3% next year, below its June forecast of 3.4% and 3.5% respectively.
The Bank said low inflation in the Eurozone could continue, predicting growth of 1.1% in 2015, rising to 1.6% in 2016-17.
In another drag, rating agency Moody's warned that the risks of Greece leaving the Eurozone have risen but are still lower than in 2012.
The general election on 25 January could have "negative credit implications" for other Eurozone members should the left-wing Syriza party win, Moody's said.
It was also bad news for economic data in Europe and the US.
Eurozone industrial production fell 0.4% year-on-year in November following a 0.8% increase a month earlier. Analysts had pencilled in a 0.7% drop.
US retail sales decreased 0.9% in December, more than the 0.1% dip predicted by analysts. The Commerce Department's figures marked the largest fall since January 2014.
ECB ready to buy government bonds
European Central Bank (ECB) President Mario Draghi has told Germany's Die Zeit newspaper that the monetary authority is ready to buy government bonds ahead of the meeting.
His remarks came as the ECB faces calls to introduce full-blown quantitative easing to address deflation in the euro-area when it meets on 22 January.
Separately, the European Court of Justice has said that the Outright Monetary Transactions programme appears legal as long as certain conditions are met.
Energy and mining stocks decline
Energy shares including BP and Royal Dutch Shell declined as Brent prices fell for a fifth day.
Brent crude decreased 0.56% to $46.33 per barrel, according to the ICE.
Mining stocks, such as Rio Tinto Group and BHP Billiton, also dropped after copper slipped to a five-and-a-half-year low.
Jeronimo Martins SGPS SA gained after the grocer said fourth-quarter comparable sales rose in Portugal and Poland.
Tesco jumped after Pershing Square Capital Management's Bill Ackman said he had considered investing in the UK supermarket chain. |
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| | US Market Report | | US open: Stocks fall amid lower than expected retail sales in December Markets were falling on Wednesday after the US retail sales advance came in lower than expected month-on-month for December. Early in the day the Dow Jones Industrial Average dropped 1.27% to 17,390.90, the S&P 500 decreased 0.95% to 2,003.79 and Nasdaq declined 0.67% to 4,630.24.
US retail sales fell 0.9% month-on-month in December, posting a sharper decline than consensus expectations of -0.1%.
Barclays Research said: "After incorporating the weaker-than-expected core retail sales data, our tracking estimate of fourth quarter (Q4) real consumer spending fell to 4.1% (previous: 4.4%) and our Q4 real gross domestic product tracking estimate fell two-tenths to 3.4%."
Oil prices were under continued pressure with WTI down 0.1% at $45.84 a barrel and Brent falling 0.2% to $46.51 a barrel.
Jasper Lawler from CMC Markets said: "Declining oil and copper prices reflect in part oversupply but also slower demand particularly from the likes of China, the world's biggest buyer of commodities.
"Oil and copper not only have their own particular supply/demand issues but are being pressured by a rallying US dollar in which they are denominated."
IG analyst Alastair McCaig added: "Copper has managed the impossible by shifting oil off the top of the commodities watch list. This sudden collapse in the metal by more than 5% has been triggered by the World Bank's downgrade of global growth for 2015."
Over on COMEX, gold futures were advancing 0.45% to $1,239.90 while the dollar was sliding against the pound, the yen and the euro.
The yield on a benchmark US 10-year Treasury fell eight basis points to 1.82%. |
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| | Broker Tips | | Broker tips: Tesco, Supergroup, Game Digital Shore Capital has warned about a "myriad of challenges" for supermarket group Tesco after it emerged that the company's store-pruning strategy has reached central Europe.
"We will watch with interest to see how matters develop but clearly widespread [industrial] action would not be helpful to Tesco's cause in this market," ShoreCap analysts Clive Black and Darren Shirley said. They added that plans for Tesco's international operations are yet to be clearly articulated to investors.
A return to strong positive like-for-like (LFL) sales growth in the third quarter at Supergroup "should be welcomed" by the market, according to Investec which lifted its target for the fashion retailer on Wednesday.
"Valuation looks undemanding for a business capable of delivering consistent double-digit growth given the longer-term opportunities, both within the UK and Internationally," the broker said.
Canaccord Genuity has cut its rating for Game Digital from 'buy' to 'hold' and slashed its target from 393p to 300p after the video-games and console retailer delivered a profit warning. | | |
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