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FTSE 100 falters but mining shares provide some support after Rio Tinto results

  • FTSE 100 down 14 points

  • Rio Tinto rises after results

  • BAT figures disappoint

9.28: Mining shares give some support to FTSE 100

The FTSE 100 remains in negative territory but mining shares are providing some support after decent results from Rio Tinto PLC (LON.RIO).

The group – which has run into controversy in recent months after dynamiting heritage areas at its Pilbara mine to access iron ore – reported a 3% rise in full year revenues. Iron ore revenues, as it happens, jumped 14%. The company has also lifted its dividend by 26%, helping its shares to climb 202p or 3.2% to 6462p and making it the top riser in the leading index.

Analyst Nicholas Hyett at Hargreaves Lansdown said: “Rio has continued the recent trend in mining majors, with bumper results driven by high levels of efficiency and rising commodity prices. However, the destruction of historic aboriginal sites in Australia has marred what would otherwise be a very good year for the group – ultimately costing the company much of its senior management team.

“Iron ore has been the standout performer, and since that remains Rio’s bread and butter, that has turbo charged results at the group level. Higher cash flows and some caution on shareholder returns means net debt has tumbled and the balance sheet looks in excellent shape to fund a planned uptick in capital expenditure….but the juggling act between investing in growth and preparing for tougher times is a difficult one.”

Nevertheless the Rio results have boosted the whole sector, with Antofagasta PLC (LON.ANTO) adding 46p or 2.8% to 1682p, BHP PLC (LON.BHP) (which reported positive results on Tuesday) 1.6% or 37.5p better at 2298p and Anglo American PLC (LON.AAL) up 1.6% or 45p at 2863.5p.

That is not enough to drag the FTSE 100 out of the red, with the index down 14.06 points or 0.21% at 6734.8.

8.32am: FTSE slips after inflation ticks up

The FTSE 100 began where it ended on Tuesday – in the red as inoculation and stimulus optimism fizzled.

The latest inflation data was never going to change sentiment, even if consumer prices rose by a marginally faster than expected 0.7% in January, pushed up by higher food and household goods costs.

“Inflation has started 2021 in much the same vein as it finished 2020, low and moving sideways,” said Laith Khalaf, analyst at AJ Bell.

“The fact that restaurants and hotels provided a large upward pressure on CPI, despite largely being shuttered in January, provides ample cause for caution when interpreting broad economic indicators in a world where activity has been so horribly distorted by lockdown.

“The January price variation of some common food items like cauliflowers, crisps and fish fingers suggests there may have been some temporary Brexit disruption at play too.”

Premier Foods (LON:PFD), the owner of the Angel Delight and Bisto brands (among a host of others), rose 4.3% in the wake of the data.

Up a flight on the Footsie, British American Tobacco (LON:BAT) was headed in the opposite direction. It lost 5.2% after its prelims apparently missed market expectations.

The funds supermarket, Hargreaves Lansdown (LON:HL.), was down 6.2% after founder Peter Hargreaves sold £300mln-worth of shares.

6.55 am: Flat start predicted 

The FTSE 100 is expected to start Wednesday’s session on the front foot as traders await the latest batch of UK inflation data.

Spread-betters IG expect the blue-chip index to open up 18 points after ending Tuesday’s session down 7 points at 6,748.

“In recent months headline CPI numbers have fallen below the radar a little, however given the sharp rise in 10-year yields since the start of this year in the US, as well as here in the UK, fears over a sustained rise in inflation is starting to stalk the markets”, said Michael Hewson at CMC Markets.

“This rise in prices isn’t expected to manifest itself in today’s January numbers, however the headline CPI numbers could start to get more interesting as the year progresses. Expectations are for UK inflation to slip back to 0.5% from 0.6% with core prices also set to decline to 1.3%, from 1.4%”, he added.

Traders may also be keeping an eye on the latest batch of minutes from the Federal Reserve, which are due to be released later today.

Predictions for a positive FTSE 100 open followed a mixed performance for US markets overnight, with the Dow Jones Industrial Average closing up 0.2% at a record high of 31,522 while the S&P 500 dropped 0.06% to 3,932 and the Nasdaq fell 0.34% to 14,047.

The picture was also mixed in Asia this morning, with Japan’s Nikkei 225 falling 0.58% while Hong Kong’s Hang Seng was up 0.99%.

On currency markets, the pound was down around 0.17% against the dollar at US$1.388, although the inflation data could provide some catalysts for movement.

Around the markets:

Sterling: US$1.388, down 0.17%

Brent crude: US$63.54 a barrel, up 0.3%

Gold: US$1,789 an ounce, down 0.03%

Bitcoin: US$50,005, up 2.8%

6.50am: Early Markets – Asia / Australia

Stocks in the Asia-Pacific region were mixed on Wednesday as Japan’s exports rose 6.4% in January compared to a year earlier, according to trade statistics released by the country’s Ministry of Finance.

The Hang Seng index in Hong Kong surged 1.19% while Mainland China’s markets were closed for the Lunar New Year holidays.

In Japan, the Nikkei 225 shed 0.58% and South Korea’s Kospi slipped 0.89%.

Shares in Australia fell, with the S&P/ASX 200 closing 0.46% lower.

READ OUR ASX REPORT HERE

Proactive Australia news:

PVW Resources Limited (ASX:PVW) made an encouraging debut on the ASX today, opening at 16 cents and trading up to 20.5 cents.

OAR Resources Ltd’s (ASX:OAR) (FRA:F1S) results from maiden aircore drilling at its 100%-owned Gibraltar Halloysite Project on the Eyre Peninsula of South Australia, confirm the presence of kaolinite in all holes sampled and high-value halloysite in 24 of the 59 holes drilled.

Northern Minerals Ltd‘s (ASX:NTU) (OTCMKTS:NOURF) (FRA:NUN) final results from its 2020 rare earth exploration and resource definition drilling campaign at the Browns Range Project in Western Australia support the potential for growth in resources.

Vango Mining Ltd (ASX:VAN) has received encouraging gold results from diamond drilling at Ned Creek’s Project in Western Australia’s Murchison region where it is spending $5 million over a three-year period to earn a 51% interest from Lodestar Minerals Limited (ASX:LSR).

Core Lithium Ltd’s (ASX:CXO) (OTCMKTS:CXOXF) rotary air blast (RAB) drilling has found gold mineralisation beneath the newly-discovered Far East belt at its wholly-owned Bynoe Gold Project in the Northern Territory.

OAR Resources Ltd’s (ASX:OAR) (FRA:F1S) results from maiden aircore drilling at its 100%-owned Gibraltar Halloysite Project on the Eyre Peninsula of South Australia, confirm the presence of kaolinite in all holes sampled and high-value halloysite in 24 of the 59 holes drilled.

Creso Pharma Ltd (ASX:CPH) (OTCMKTS:COPHF) (FRA:1X8) wholly-owned Canadian subsidiary Mernova Medical Inc has secured purchase orders for its leading Ritual Green product range totalling C$494,131 (A$502,199), demonstrating ongoing strong uptake.

Galena Mining Ltd (ASX:G1A) (FRA:GM6) welcomes the execution by Abra Mining Pty Limited (AMPL), the joint-venture company for the Abra Base Metals Project, of a Power Purchase Agreement (PPA) with Contract Power Australia Pty Ltd.

Rumble Resources Ltd’s (ASX:RTR) (FRA:20Z) final drill assay results from reverse circulation drilling at Barker Well Prospect of Braeside project in Western Australia’s Pilbara region have revealed multiple high-grade lead breccia zones from surface and over 800 metres of strike.

Matador Mining Ltd (ASX:MZZ) has received more impressive near-surface gold grades and widths from the final three holes of the Isle Aux Morts resource and extension drilling program at its 100%-owned Cape Ray Gold Project in Newfoundland, Canada.

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