Weak miners dip FTSE below key 200-day moving average
MINING stocks, dented by heightened investor concerns about the strength of the global economic recovery, pushed Britain’s top shares below a key technical level yesterday, a bearish signal for the index.
The FTSE 100 closed down 55.76 points, or one per cent, at 5,808.89, having breached its 200-day moving average of 5,815.
US Federal Reserve chairman Ben Bernanke on Tuesday sent a strong signal that no new stimulus measures were on the cards, despite a recent run of gloomy data from the world’s biggest economy.
Sentiment was further dampened by a threat to Britain’s top-notch sovereign credit rating by ratings agency Moody’s.
“I think a few people were hoping, considering Bernanke rarely disappoints the market, that he would be fairly reactive (to last week’s poor US jobs data) but we didn’t get that last night,” Joshua Raymond, market strategist at City Index, said.
“There’s also the Moody’s warning although in my opinion, it’s nothing new… (It) has said before the triple-A rating is liable to change. Maybe the moves on the market only really emphasise the sensitivity amongst traders at the moment.”
US blue chips were flat by London’s close.
Risk sensitive miners knocked the most points off the FTSE 100 index, falling in tandem with metals prices.
Chilean copper miner Antofagasta led the market lower, off five per cent, after it said the ramp-up of its Esperanza copper mine would be completed in the second half of the year, having taken longer than initially planned.
Integrated oil stocks pared earlier losses, with Royal Dutch Shell up 0.1 per cent, as crude rose $1.77 to $100.86 after OPEC failed to reach a deal to increase output, triggering fears over supply later this year.
Banks were stronger after the Treasury said they would be allowed to reduce their use of its credit guarantee scheme, a move which finance minister George Osborne said indicated the sector “is clearly on the mend”.
Lloyds Banking Group was the star blue-chip performer, up 2.3 per cent, after the bank sold its truck leasing company Hill Hire to American group Ryder System Inc for £151m.
“This will… be seen as a positive as (its) non-core asset sale is now underway and this will in turn improve the share price performance and build back up its capital ratios,” Atif Latif, director of trading at Guardian Stockbrokers, said.
“Fundamentally we remain buyers on Lloyds due to the recent underperformance.”
Barclays firmed 0.2 per cent, although weakness was seen elsewhere in the sector. Royal Bank of Scotland shed 0.1 per cent, while HSBC and Standard Chartered both dropped 1.1 per cent.
Associated British Foods and Johnson Matthey fell after going ex-dividend.
On the second line, British pubs group Punch Taverns added 6.8 percent after it reported a sharp rise in sales at its Spirit managed division and said it was on track to complete a demerger by the end of the summer.