FTSE 100 watch: Miners, Eurozone GDP lift sentiment

on Feb 14, 2014
Updated: Apr 9, 2020

iNVEZZ.com, Friday, February 14: Britain’s benchmark equity index, the FTSE 100, is heading for its seventh gain in eight sessions, propped up by mining companies, which were boosted by Anglo American’s (LON:AAL) upbeat results and by renewed optimism on China, the world’s top metals consumer. Better-than-expected fourth-quarter economic growth in the Eurozone also boosted sentiment.

As of 13:52 UTC today, the Footsie was up 1.79 points, or 0.03 percent, at 6,661.21 following a 0.2 percent loss yesterday, when disappointing outlooks by food ingredients maker Tate & Lyle (LON:TATE) and aerospace and defence group Rolls-Royce Holding (LON:RR) dragged down the index. Some investors are concerned that company results may not be strong enough to justify valuations that have been stretched by central bank stimulus.

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**Miners rise on Anglo, China**
All FTSE 100 miners have risen so far today, led by Fresnillo (LON:FRES) and Antofagasta (LON:ANTO), on hopes that demand from China will remain strong. Data released overnight showed that China’s annual consumer price inflation remained at a seven-month low of 2.5 percent and factory gate prices fell for a 23rd consecutive month. In the absence of inflationary pressures, the country’s central bank may take steps to stimulate the economy. Fresnillo’s share price shot up 5.5 percent to 973.5p at 13:47 UTC, while Antofagasta’s share price was 2.8 percent higher at 930.83 p.

By the same time, Anglo American’s share price had climbed 0.2 percent to 1,536.5p. The diversified global miner posted a forecast-beating underlying operating profit of $6.6 billion for 2013, up 6.0 percent year-on-year on the back of an improved operational performance, with currency gains offsetting weaker prices. (Anglo American share price: Underlying operating profit rises six percent in 2013) It also said its large Minas Rio project in Brazil was on track to deliver iron ore by the end of the year following a series of delays.

**Eurozone GDP improves sentiment**
The Eurozone economy grew 0.3 percent in the fourth quarter as compared to the preceding three months, accelerating from a 0.1 percent increase in the third quarter. Year-on-year, the common currency bloc’s GDP expanded 0.5 percent. Analysts polled by Reuters had expected a 0.2 percent quarterly rise and a 0.4 percent annual increase.

The expansion was driven by stronger than expected growth in the region’s two biggest economies – Germany and France, while Italy returned to growth for the first time since the second quarter of 2011.
The Eurozone is Britain’s biggest trading partner, accounting for about half of UK exports, so the pick-up in growth is welcome news for British exporters and should contribute to a more even UK economic recovery, which has so far relied mostly on household spending.
**Individual moves**
International Consolidated Airlines (LON:IAG) extended yesterday’s gains as Deutsche Bank recommended investors buy the stock, raising its target price to 506p from 430p. The investment bank said that despite some concerns, the parent company of British Airways and Spanish carriers Iberia and Vueling is successfully going through its restructuring and its valuation is still compelling. The move came after IAG announced yesterday a ‘landmark’ deal with Spanish pilots’ union SEPLA, removing the threat of a strike at Iberia. (IAG share price rises on Iberia’s ‘landmark’ agreement with pilots) IAG’s share price gained 2.3 percent to 452p as of 13:48 UTC.
Marks and Spencer Group (LON:MKS) was backed by a Reuters report that it may soon unveil plans for a share buyback to help reassure investors that a costly revamp is about to pay off. Marks and Spencer’s share price was 0.6 percent better off at 488.02p.
GlaxoSmithKline (LON:GSK) was boosted by reports that it could bid for US biopharma group Arena in order to bolster its presence in the market for weight-loss remedies, and also by a Barclays note, in which the investment bank raised its price target on the stock to 1,575p from 1,545p. GSK’s share price was up 0.8 percent at 1,665.5p.

Coca Cola HBC (LON:CCH) was the biggest faller, dropping 2.9 percent to 1,543.46p at 13:49 UTC. The company said today it is “cautiously optimistic about the year ahead” despite challenging operating conditions and unfavourable currency swings. (Coca Cola HBC share price: Bottler ‘cautiously optimistic’ after first profit rise in three years)
The bottler was closely followed by Wm. Morrison Supermarkets (LON:MRW), which was hit by a downgrade from Exane BNP Paribas to ‘underperform’ from ‘neutral’. The investment bank also lowered its price target by 13 percent to 200p, saying that the grocer will probably not be bought out, as media reports suggested earlier this week. (Morrisons share price rallies on buyout talks) Morrisons’ share price coughed up 1.7 percent to 232.07p.
Vodafone (LON:VOD) was another major faller, down 1.5 percent to 218.1p, after saying it will spend £1.9 billion to extend its Indian licences and buy new frequencies in the world’s second largest mobile market. (Vodafone share price: Company to pay £1.9bn for Indian spectrum licences)
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