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China in the focus as miners draw FTSE lower

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Emissions action in China and troubles for one of the country’s biggest property companies reverberated in the UK’s top index on Thursday as pressures on metal prices pulled down the shares of London-listed miners.

By the end of play on Thursday the FTSE 100 had dropped by 0.5%. The 32.8 point drop led it to 7,190.3.

It came as Chinese property giant Evergrande said that an approximately £1.9 billion deal which would have seen property firm Hopson Development take a controlling stake in Evergrande.

It reignited fears of a collapse at the debt-ridden Chinese company, which could hit the Chinese construction market.

China’s builders use up large portions of the world’s mined natural resources, using masses of steel and cement to build the country’s rapidly expanding cities.

So any move in the Chinese economy is especially likely to hit miners such as BHP, Glencore, Rio Tinto, Anglo American and Evraz, who were all among the biggest losers in London on Thursday.

“European markets have slipped back today after a weak handover from markets in Asia, as investor minds turn to the possibility of a possible Evergrande default ahead of the weekend as we come up to the end of the 30-day grace period for payment of an 83m US dollar bond interest payment,” said CMC Markets analyst Michael Hewson.

“The collapse of an asset sale has also raised the prospect that the company could default as soon as this weekend amidst fears over a contagion effect to the rest of the property sector.”

He added: “Basic resource stocks have come under pressure, along with metals prices, after China targeted the steel and cement sectors to reduce emissions.

“A further aim is to accelerate restructuring in steel, primary aluminium, and flat glass and other energy intensive sectors.

“Copper prices slumped by over 3%, dragging the likes of BHP, Rio Tinto and Anglo American lower.”

By the end of the day in Frankfurt the Dax index was also lower, 0.2% down.

It was matched by the Cac 40 in Paris.

In New York the S&P 500 had lost 0.1% shortly after markets in Europe closed.

The Dow Jones was 0.4% down.

Sterling dipped by a little under 0.1% against two major international currencies.

By the end of the trading day in London one pound would buy 1.3812 dollars or 1.1862 euros.

Barclays shares slipped, down 0.8%, despite its investment bank beating expectations in the third quarter of the year.

Over the last three-month period Barclays nearly doubled its pre-tax profit, helping it register the best nine months in the company’s history.

Meanwhile Unilever’s shares rose 1.2% after the consumer goods maker stuck to its profit guidance despite “strongly elevated” costs that will last into next year.

The biggest risers on the FTSE 100 were Halma, up 58p to 2,956p, Reckitt, up 108p to 5,534p, Legal & General, up 5.1p to 279.9p, Hikma, up 43p to 2,463p, and Croda, up 152p to 9,022p.

The biggest fallers on the FTSE 100 were Rio Tinto, down 237p to 4,649p, United Utilities, down 75p to 1,928.4p, Barratt Developments, down 21p to 650.8p, Evraz, down 18p to 623p, and Anglo American, down 76p to 2,762.5p.

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