FTSE 100 close: London’s premier index falls as strong performance for miners not enough to tip market into green
The FTSE 100 closed lower on Tuesday as markets ran out of steam despite a strong performance from many of the index’s mining giants.
The capital’s premier index closed 0.5 per cent lower at 7,634.52 points, while the domestically-focused mid-cap FTSE 250 index, which is more aligned with the health of the UK economy, ended 0.34 per cent lower at 18,815.04 points.
IG’s Chris Beauchamp said “for the moment it looks like stocks have come too far, too fast to push much higher in the near-term.”
The FTSE’s top performer was Fresnillo, which ended 3.5 per cent higher. The miner benefitted from higher gold prices.
The yellow metal stormed past $8,000 per ounce after data on the US labour market suggested the Fed may have to stop hiking interest rates soon.
Fellow gold miner Endeavour Mining also posted gains, ending 1.5 per cent higher.
Glencore held on to gains from earlier in the day, ending 1.7 higher, despite having an unsolicited offer for Canada’s Teck Resources being snubbed yesterday.
The offer would have seen Glencore acquire Teck, creating a $90bn giant and requiring Switzerland-based Glencore to undergo massive restructuring.
Glencore’s bid reflects the latest shift in the mining industry, with commodity giants looking to make deals again and consolidate market shares of valuable minerals and metals.
Elsewhere Saga dropped over 15 per cent despite its revenue growing by more than 50 per cent as older Brits returned to cruises post-pandemic. However, revenue from its insurance business fell 7 per cent year-on-year.
“The longer the market had to look at Saga’s results this morning the less it liked about them,” AJ Bell’s Danni Hewson commented.
“Yes, in theory the group returned to ‘profit’. But this was an adjusted profit and on a statutory basis losses widened thanks to impairments on its insurance business. And cash flow, the one metric which is difficult to massage, was materially lower year-on-year with only a modest reduction in the company’s onerous debt pile,”
The pound rose 0.69 per cent against the dollar, breaking the $1.25 mark which had previously been a point of resistance.
“Against a blank backdrop of economic releases and some dovish comments from the usually dovish BoE MPC (monetary policy committee) member Tenreyro … a major bull move in the pound is developing here,” said Shaun Osborne, chief currency strategist at Scotiabank.