Miners fearing US rate rise pull down FTSE 100 – London Report
UTILITIES, the InterContinental Hotels Group and mining companies yesterday weighed on the FTSE 100.
The blue-chip share index closed 0.92 per cent lower at 6,295.
InterContinental Hotels Group, one of the world’s largest hoteliers, saw its share price fall 4.83 per cent during the day to 2,640p per share, after denying rumours of a possible merger.
On Friday, Bloomberg reported that the company, which owns Holiday Inn, was exploring “strategic options including a potential sale or merger”.
Meanwhile, Glencore was yesterday’ biggest faller. Shares in the company dropped 5.31 per cent during the day to 109.7p per share. Speculation of an interest rate hike in the US led the dollar to strengthen, forcing copper prices to slide.
“Commodities are now out-of-favour again in the aftermath of the US jobs report that caused a big surge in the dollar. Gold is hovering near three-month lows with little demand amongst investors for either an inflation-hedge or a safe haven that receives no yield when US rates look set to go higher,” CMC Markets analyst Jasper Lawler said.
“Oil is faring better than metals markets having become more dependent on its own supply and demand than on the movements in the dollar,” Lawler added.
The share prices of BHP Billiton and Anglo American also fell by 2.32 per cent to 952.4p per share and 1.79 per cent to 516p per share respectively.
A hike would also hit companies such as Intu Properties and Severn Trent, which “were top fallers since higher rates will increase the cost of purchasing a mortgage and the cost of servicing high levels of corporate debt will rise,” Lawler added. Intu ended 3.68 per cent down at 324.6p , while Severn Trent shed 2.61 per cent, falling to 2,128p.
The downgrading to “hold” from “buy” on Centrica’s stock by HSBC accounted for the 3.65 per cent drop in the share price of the utilities company. Shares in Centrica were closed at 216.5p per share after the day’s trading.
The stable reaction in Asian markets to the prospects of a US rate-rise helped Asian-focused Aberdeen Asset Management to lead the FTSE 100.
The global investment group’s share price rose 1.81 per cent to 353.9p.